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OKEx Responds to Ethereum Classic 51% Attacks, Reveals Its Hot Wallet System
August 2020 by OKEx
Earlier, the Ethereum Classic (ETC) network suffered two separate 51% attacks During the first attack on Aug 1, the perpetrator coordinated a double-spend attack via the OKEx exchange, which resulted in more than $5 million in losses. OKEx provides full transparency on the details of the attack including how the attacker was able to double-spend 807,260 ETC on the exchange, preparing the terrain by registering five separate accounts and depositing 68,230.02 ZEC in multiple transactions which would later be converted to ETC.
The report includes a detailed description of how the attacker created a shadow chain to enable the double-spend attack without the knowledge of the ETC network. It also explains how OKEx was able to actively keep monetary losses to a minimum with the help of its intelligent Risk Management System. The system was triggered due to abnormal activity and suspended ETC deposits and withdrawals during the first attack. The system also allowed the exchange to completely avoid any further losses in the second attack on Aug 6.
OKEx has previously informed the crypto community that 95% of user funds are kept in cold storage. However, in this report, OKEx will reveal how its hot wallet system works. This includes how funds are kept safe using key protection mechanisms such as multi-signature, semi-offline signature and big data risk management that make it virtually impossible for hackers to obtain private keys.
As a leading digital asset exchange committed to protecting the interests of its users, OKEx was swift to cover the losses incurred during this incident and ensure that all users’ funds were safe. It has also stated that, despite having one of the highest trading volumes of ETC, should the ETC community fail to prevent further such attacks through additional safeguards, OKEx will be forced to delist this PoW token.
