Bitcoin Gold hit by double-spend attack, exchanges lose over $18 million

An unknown hacker made over $18 Million worth of BTG (Bitcoin Gold) powering “double spend” attacks on the Bitcoin Gold cryptocurrency network.

The attacks started on May 18, the attacker used a large number of servers that allowed him to take the control of the majority of the Bitcoin Gold’s network hashrate, an attack technique dubbed “51% attack.”

Bitcoin Gold ranks as the 26th-largest cryptocurrency, the overall circulating market cap is $827 million.

Bitcoin Gold director of communications Edward Iskra promptly notified the attacks to the users confirming that a malicious miner was using an exploit to steal funds from cryptocurrency exchanges in double-spend attacks. Iskra explained that the victims of the attack were not the end-users, instead the hacker targeted exchanges.

“An unknown party with access to very large amounts of hashpower is trying to use “51% attacks” to perform “double spend” attacks to steal money from Exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits.” wrote Edward Iskra, Director of Communications.

“There is no risk to typical users or to existing funds being held. The only parties at risk are those currently accepting large payments directly from the attacker. Exchanges are the primary targets.”

The technique allowed the attacker to control the blockchain and modify transactions making possible to spend the same amount of money two times.

The Bitcoin Gold team explained that due to the high cost of such kind of attack, the only way to make profits was to target exchanges to automatically withdraw a large amount of money.

The attacker monetized its effort by transferring large amounts of BTG coins at exchanges and at the same time sending the same amounts to his wallet.

“The cost of mounting an ongoing attack is high. Because the cost is high, the attacker can only profit if they can quickly get something of high value from a fake deposit,” states Bitcoin Gold team. “A party like an Exchange may accept large deposits automatically, allow the user to trade into a different coin quickly, and then withdraw automatically. This is why they are targeting Exchanges.”

With this attack scheme, the hacker was able to withdraw funds before being discovered.

In the attempt of mitigating the attacks, exchanges have raised the threshold needed to confirm a transaction.

“Requiring more confirmations greatly increases safety. Until now, some Exchanges were operating with less than five confirmations required. We have been urging higher limits to prevent such an attack, and urging manual review of large deposits of BTG before clearing the funds for trading.” continues the advisory published by Bitcoin Gold.

“It appears that actions on the part of the exchanges have deterred the attacker, for now.”

The Bitcoin Gold team was able to follow the stolen funds from exchanges to the BTG address GTNjvCGssb2rbLnDV1xxsHmunQdvXnY2Ft, the hacker transferred more than 388,000 BTG coins (roughly $18 million).

Even if users are not affected, the attacks could have severe consequences on the exchanges that could end in bankrupt.

According to one of the exchanges involved in the attacks, the mysterious attacker is the same actor that attempted a double-spend attack on the original Bitcoin network in the past.

“One of the targeted Exchanges reported that they strongly believe this attacker attempted to hit them with a double-spend of BTC in the past. In their words, “we are 100% sure that it is the same person, we found many associations between the accounts.” concluded Iskra.

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Pierluigi Paganini

(Security Affairs – Bitcoin Gold, double-spend attack)

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