OKEx Exchange Considers Delisting ETC After $5.6 Million Loss Due to a 51% Attack
OKEx will consider delisting Ethereum Classic (ETC) following the recent 51% attacks that saw the crypto exchange lose $5.6 million. This was prompted by a double-spend where the attacker created confusion by launching a ‘shadow chain’ and leveraging OKEx’s high ETC liquidity. A report released by the crypto exchange on August 15 details:
“As for why the attacker(s) chose OKEx in particular to purchase and trade their ETC, the most likely reason is liquidity. OKEx provides excellent ETC liquidity, seeing some of the largest ETC transaction volumes in the industry.”
ETC’s 51% Attack Via OKEx
As per the report, this attack was well orchestrated and had been in play since June, when the malicious actors created five accounts with OKEx. The crypto exchange went on to approve the KYC documents of these attackers, not knowing the underlying motive. Interestingly, all these accounts passed the platform’s level 2 and 3 KYC protocols, which attracted an increase in their withdrawal limits.
Having penetrated the OKEx ecosystem and gaining liquidity exposure to ETC, the attackers went on to deposit 68,230.02 ZEC into their OKEx accounts. These funds were then converted to ETC and withdrawn to multiple external addresses, totaling $5.6 million worth of Ethereum classic. With the funds already transferred, the attackers initiated the 51% attack, which took place in three stages.
“The whole operation can be broken into three stages: 1) the creation of a “shadow chain” or a secret, alternate chain to ETC’s mainnet, 2) the actual double-spend, and 3) the profound chain reorganization that resulted in losses to OKEx.”
OKEx Bares the Losses
OKEx has since clarified that the company bore the $5.6 million loss, according to its user protection policies, which means that ETC funds deposited with them remained safe. The 51% attack on the ETC blockchain took place twice, with the initial one being on August 1 while the second followed on August 6. OKEx was, however, only affected by the first attack since it had already halted ETC deposits and withdrawals.
The exchange noted that it took some short and long-term measures to prevent such a risk in the future. If not delisted, OKEx plans to increase ETC confirmation times should the community act on improving the security of this blockchain. According to the company’s CEO, Jay Hao, they are not in a rush to delist ETC given its significance in the platform’s liquidity:
“Given ETC’s popularity and standing, we are not rushing into delisting … However, they need to implement significant upgrades to the network to reduce the chances of another 51% attack happening.”