$150 Million Worth of Ethereum Frozen Due to Parity Vulnerability

09 November, 2017, 02:00 | Author: Terri Saunders
  • Here's how you can master Ethereum and blockchain technology

On Monday, November 6, an unknown user triggered a bug in the source code of the Parity Ethereum wallet that has permanently locked funds inside users' accounts. However that code still contained another issue - it was possible to turn the Parity Wallet library contract into a regular multi-sig wallet and become an owner of it by calling the initWallet function.

In July 2017, it emerged that a hacker had compromised more than $30m (£23m) worth of the Ethereum currency by exploiting a separate issue in a number of Parity-maintained wallets.

On GitHub, a user going by the nickname of Devops199 took credit for discovering and accidentally triggering the bug.

In yesterday's statement, Parity notes that it is now analyzing the situation, and will provide an update "shortly"; so perhaps today.

One high-profile company impacted is Polkadot, a project that raised over US$140 million in a token sale.

Two days after an unknown person with the GitHub handle devops199 killed the library contract associated with certain Parity wallets, freezing over 500,000 Ether, Martin Swende, the Ethereum Foundation's head of security, told ETHNews that "I see it as an objective fact that these funds can not be unlocked unless there is an hardfork involved".

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Ethereum is a blockchain-based distributed platform specifically tailored for smart contracts.

In the meantime, Parity announced that it had set up a website where concerned users could find out whether their holdings are among those frozen. Of that, about $90 million belongs to Parity founder and former Ethereum core developer Gavin Woods' Initial Coin Offering (ICO) Polkadot, according to Tuur Demeester, editor in chief at Adamant Research.

Matthieu Suiche, a security and cryptocurrency expert at Comae Technologies, said in a blog post that the bug in question had likely managed to escape an internal Parity code review. Hard forks effectively create a new version of a cryptocurrency when a faction of users refuse to update the original currency's underlying software-resulting in two different sets of transaction ledgers.

Martin Holst Swende, the head of security for the Ethereum Foundation, said in a published report that any resolution to the problem requires a hard fork, as there is no way to recreate the code and make the funds accessible without that tactic.

Users of Parity wallets were confused yesterday after the company revealed the discovery of the security threat.

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