Silence is golden, though the gold backed cryptocurrency would much rather prefer silvery speeches. AurumCoin (AU), a small and mostly unknown cryptocurrency has claimed that they were victims of a recent 51 percent attack. To compound matters, they claim Cryptopia, the exchange where the cryptocurrency is listed, has lost about15,7520 AU. This equates to roughly $500,000 and clearly a big deal for such a small and upcoming currency. Unfortunately, in an “it wasn't me” maneuver reminiscent of Shaggy, the cryptocurrency has appropriated all the blame on Cryptopia.
AurumCoin has announced that they are just an open-source distributed currency and thus not responsible to anyone. Cryptopia, on the other hand, has not even acknowledged the loss, yet.
Who Are The Major Parties In This Story
AurumCoin (AU) claims it is a gold-backed cryptocurrency, each of its tokens being pegged to the value of 24K gold and being backed with 0.75 grams of gold. For the past 4 years, AU has been running its own blockchain where the token is mineable and has a hard cap of 300,000 coins. Interestingly, some have been a little skeptic about the crypto. They say that the mining seems to have no issues despite its supposed gold peg. Also, AU prices have been rather volatile, climbing from $9.50 to a shade over $35 in just over a week. One would expect a truly gold-backed cryptocurrency to be a bit more stable than that.
On the other side is the Christchurch, New Zealand based Cryptopia. Founded by Adam Clark and Rob Dawson this is a combined cryptocurrency exchange, trading platform, and marketplace. The exchange looks to facilitate the purchasing, selling and trading of almost anything, using cryptocurrency. It is generally considered trustworthy and ranks among the top50 in terms of trading volumes.
About A 51 Percent Attack
A 51 percent attack occurs when a hacker is able to overtake the crypto network with more than 51 percent of its hash rate. This gives the hacker extensive authority and control over transactions; thus new transactions may be stopped or reversed or there might be double spending. Small cryptocurrencies. are more susceptible to this sort of an attack
What Happened And What Is Going To Happen
AurumCoin has a market capitalisation of about $10 million, this made it a plum target for this sort of nefarious behavior. It appears the hacker first sent 15,752.26 AU to Cryptopia which were sold for different cryptos. Upon completion, the transactions were summarily reversed
Cryptopia has not conceded to any sort of attack on their network, although they did confirm no AU trades have been processed this month. In fact, AU transactions were put on temporary hold due to an “infrastructure upgrade.”
AurumCoin has been more vocal and released a statement “Aurum coin (AU) network was hacked (51 percent attack), a total of 15,752.26 AU is missing from Cryptopia’s wallet (cryptopia.co.nz exchange). Aurum coin network is not the responsibility of anyone, same as bitcoin network, it is an open source distributed crypto currency. What’s worse is that cryptopia exchange do not admit it. This is not the way to solve this problem.”
They did stop short of detailing what they wanted the exchange to do. However, the fact of the matter is that AurumCoin did seem to lack the hash rate to prevent a 51 percent attack which in turn cost Cryptopia to lose so much money. When a similar attack happened on Bitcoin Gold recently, the exchange, Bittrex, simply delisted the crypto. .It does feel a little harsh and borders on victim bashing. It is yet to be actually verified as the exchange themselves have yet to admit any problems.