On July 30 and August 1, 2020, the Ethereum Classic Network suffered a 51% attack with hash rate purchased from NiceHash; a company previously known for inexplicably losing $62M in Bitcoin, and whose co-founder is pending extradition to the United States for charges of fraud and racketeering after being convicted of similar offenses in Slovenia.
In addition to the technical upgrades under immediate development and the ongoing investigation into the attacks, ETC Labs has launched a new initiative to engage law enforcement and global regulators to bring accountability and transparency to hash rental.
Many exchanges and other digital asset service providers have implemented robust KYC and anti-money laundering programs, however, hash rental platforms such as NiceHash often purport to be unregulated, potentially facilitating money laundering and other illegal activities. With little or no KYC, AML, or crypto address screening, customers have the ability to rent hash rate to potentially launder cryptocurrency for freshly minted tokens with no history. Considering how important hash rate is to the security of Proof-of-Work blockchains, this is a serious vulnerability for the blockchain ecosystem as a whole.
ETC Labs and its partners will take all steps necessary to secure the Ethereum Classic network, including legal action against those who conduct or facilitate malicious attacks. ETC Labs is currently working with authorities in relevant jurisdictions and will share more information as well as progress updates shortly.
Ethereum Classic Labs to Pursue Enforcement and Regulation of Hash Rental Platforms was originally published in Ethereum Classic Labs on Medium, where people are continuing the conversation by highlighting and responding to this story.