Latest Ether Transfers Seem To Be A Result Of Blackmail: Research

The latest Ether transfers that spent more than $5 million in gas fees seem to be a result of extortion of a compromised exchange according to researchers. In our latest Ethereum news, we take a closer look at the Ethereum analysis.

Over the past week, the crypto community was left wondering after the three small latest Ether transactions that incurred millions of dollars in fees. However, according to the latest reports, the seven-figure fees could be spent on a purpose, as a part of a blackmail scheme targeting a compromised exchange with the Chinese blockchain analysis company PeckShield saying that the transactions were resulting from extortion attempts.

The Chinese media outlet Chainnews, explained that the analysis firm PeckShield concluded a research that led to the conclusion of the multi-million dollar fees were paid by hackers that wanted to make a ransom on a cryptocurrency exchange. The report said that the exchange was compromised due to a phishing attack which allowed the hackers to gain control over permissions for as many of the operational functions on the platform, including the servers.  While the implementation of the multi-sig restrictions prevented the attackers from taking out all of the funds from the exchanges to wallets in their control, they were able to make huge transfers to whitelisted addresses that determined the gas fees paid on the transactions.

The researchers believe that the hackers threatened the exchange they will empty the wallets if they don’t pay the extortion, with PeakShield asserting that 21,000 ETH remained in the wallet under the hackers’ control. The first multi-million dollar transfer fee occurred on June 10 when $2.6 million in fees was paid to move 0.55 ETH. In only one day, the second transfer of 350 ETH was made from the same wallet, spending $2.6 million in gas. The day after, the ethereum network processed yet another transfer by a different wallet which ended up paying 2310 ETH to move 3,221 Ether.

So the million-dollar txfees *may* actually be blackmail.

The theory: hackers captured partial access to exchange key; they can't withdraw but can send no-effect txs with any gasprice. So they threaten to "burn" all funds via txfees unless compensated.https://t.co/kEDFGp4gsQ

— vitalik.eth (@VitalikButerin) June 12, 2020

The huge transfers spiked the theorists to have different opinions but all wanted to explain the seven-figure fees, by attributing the transactions to someone that wanted to revenge himself as a former exchange employee, while others claimed it was simply a human error or some claiming it was a bug in a money-laundering bot.