Buy Crypto at Low Fees

Sign Up

China report claims a hacked crypto-exchange is behind three abnormal multi-million Ethereum (ETH) fees

China report claims a hacked crypto-exchange is behind three abnormal multi-million Ethereum (ETH) fees

Photo by Chris Yang on Unsplash

Since the past few days, certain, and rather strange, transactions are stirring up debate in the Ethereum community. Data shows someone, an entity or individual, spent millions in transaction fees for just a few hundreds of dollars in the actual transfer – a rarely seen occurrence.

But a new report out of China claims a cryptocurrency exchange has fallen victim to hackers, explaining over $5.7 million spent on Ethereum fees earlier this week.

The first

The first of such came earlier this week on June 10, when reports stated someone accidentally fat-fingered millions of dollars by presumably mistaking the transaction fees and transfer values.

Theoretically, anyone holding millions in ETH is likely not a first-time user of cryptocurrencies, exchanges, or wallets. Furthermore, transactions of that amount are usually cut up into smaller values, precisely to avoid any potential missending of funds. 

Most shoved away the first such instance of the million-dollar transaction fee as an unfortunate fat-finger trader. Some observers on Twitter raised money laundering concerns but were voiced down by others. 

Ethereum fees, in the meanwhile, shot up to over $2 million per transaction, on-chain firm Glassnode noted

The second

Then came the second instance, a day after the first, on June 11. The transaction was exactly the same as previously, even coming from the same address:

This time, money laundering concerns increased, with some added chatter of an exchange, “whale,” or crypto fund possibly held at ransom. Others cited possible operational error, or even a transactional algorithm running haywire. Both factors could have explained how the transactions were the way they were.

Then came the third. 

Dovey Wan of Primitive Ventures tweeted:

Wan said the transactions, all three, showed all characteristics of exchange or similar cryptocurrency service being hacked. The hacker, she presumed, was able to able to move funds only to whitelisted addresses, or faced constraints, explaining the use of singular addresses. 

Wan pointed out the first two transactions were sent from “0xcdd6a2b,” “very likely” meaning a hot wallet with a lot of incoming and outgoing flows.

Hacked

Ethereum co-founder Vitalik Buterin chimed in with his analysis of the matter, citing a report by a Chinese blockchain analytics company that seemed to confirm the hacking allegations. 

The local Chinese firm, called PeckShield, claimed hackers have indeed gained access to the funds of an unnamed exchange, and are able to transfer to accounts marked “reliable,” not their own. 

The above is leading to a ransom-like scenario. Hackers are allegedly causing losses to the tune of millions of dollars by broadcasting high-fee transactions until they are allowed to transfer to their own accounts, the report noted. 

If PeckShield is to be believed, there are more such abnormal transactions coming in the upcoming days. 

CryptoSlate reached out to PeakShield for verifying claims of its report. Any correspondence will be updated in the article. 

Posted In: , , Hacks

Like what you see? Subscribe for daily updates.