March 5, 2019 Weekly Crypto Round Up
Over 2 million EOS tokens stolen and #DeleteCoinbase gains momentum
Baby Got Hack
This weekend, an EOS (EOS) Telegram channel used for community updates announced 2.09 million EOS had been stolen. The tokens, worth about $7.7 million, were moved to an unfriendly account after a block producer failed to update the EOS Community Arbitration Forum’s blacklist. Unlike the Ethereum or Bitcoin networks, EOS runs a delegated proof-of-stake consensus method in which just 21 nodes validate transactions. These block producers are voted on once every minute, but pessimists aren’t convinced the system is completely democratic. For the ECAF blacklist to prevent known cheaters from abusing the network, every node must maintain an updated blacklist.
A recently elected block producer, games.eos, failed to correctly setup their blacklist, enabling the “hack”. Once stolen, the tokens were moved to an account with digital asset marketplace Huobi. The tokens were then frozen, but the risk remains clear. If just one node is corrupted, whether by incompetence or malice, that node wields power over the others through misuse of the blacklist. This loophole is certainly concerning for a project that raised $4 billion during its ICO and currently ranks 4th among cryptocurrencies by market cap. EOS is now working on a more permanent and scalable solution to protecting assets, but the 21 nodes will need to agree on the best direction.
#DeleteCoinbase
In a movement similar to #DeleteFacebook and #DeleteUber, last week’s #DeleteCoinbase campaign came to a head after a series of missteps by the popular exchange. In mid-February, Coinbase announced its wallet would let users store their private keys in the cloud with Google Drive or iCloud. The announcement was met with distaste as many deemed the practice unsafe and not in accordance with best practices. Furthermore, on February 28, the exchange launched support for Ripple (XRP). While Ripple holders were obviously excited about the news, others remain wary of Ripple’s position in the eyes of the SEC. While all cryptocurrencies face regulatory uncertainties, Ripple’s initial token distribution makes it a more attractive target as an unregistered security.
Neither of these controversies would have led to much traction with the #DeleteCoinbase movement had it not been for Coinbase’s latest acquisition. In February, the exchange acquired Neutrino, a blockchain analytics company. Christine Sandler, the Head of Sales at Coinbase, noted the deal was made to bring analytics work in-house after previous vendors were selling Coinbase data, a significant problem within itself. However, the new scandal arises from Neutrino’s close relationship and shared leadership with Hacking Team, a spyware group that’s worked to suppress the voice of political dissidents. Hacking Team’s questionable actions are seen by many as in direct opposition to the foundational ideology of blockchain networks. In response, Coinbase has let go of all Neutrino employees with a history at Hacking Team. Unfortunately for the San Francisco based exchange, the spate of bad news has not yet come to an end. New rumors suggest Coinbase protestors are having trouble deleting their accounts due to restrictive account rules.
The Other News We’re Following
- Brave’s partnership with TAP Network will allow users to redeem Basic Attention Tokens for hotel stays, restaurant vouchers, and gift cards from companies like Amazon, Starbucks, Uber, and Apple
- Bitcoin finished February up after six straight months of closing in the red
- The Securities and Exchange Commission of Thailand has approved bitcoin (BTC), ether (ETH), ripple (XRP), and stellar (XLM) for use as investments in Initial Coin Offerings or ICOs
2 percent of all ether (ETH) is now locked in MakerDAO contracts according to daistats.com
“I believe the whole world is going to be tokenized.”
— Ed Moncada, CEO of Blockfolio
