Following the Coinbase exchange report that Ethereum Classic (ETC) has been subjected to deep reorganisations of its blockchain, including cases of double spending, conflicting theories have been presented to explain the possible cause.
On 1/5/2019, Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend. In order to protect customer funds, we immediately paused movements of these funds on the ETC blockchain. Read more here: https://t.co/vCx89dz44m
— Coinbase (@coinbase) January 7, 2019
Coinbase has since revised the value of the double spends detected upwards to a figure of around $1.1 million involving 219,500 ETC, and the still-developing narrative is dividing opinion as to the depth and purpose of the attack.
Denial of Motive v Suggestion of Intent
Although the only notable exchange to publicise the event, Coinbase funds are not thought to be effected as they quickly froze their transactions with the blockchain.
Initially taking an opposing stance to Coinbase, Ethereum Classic developers responded to the news by denying any double spends took place and pointed to ASIC manufacturer Linzhi testing new ethash machines as accounting for the excessive network hashrate rather than a malicious attempt at a 51% attack.
Subsequent tweets from the same group have shown active investigation acknowledging Coinbase may have been correct and suggests the situation is still fluid.
To be clear we are making no attempt to hide or downplay recent events.
Facts are facts and as the situation develops we’ll soon get a full picture of what actually took place.
Linzhi is testing ASICS. Coinbase reported double spends; both may be true.
In time we will see. https://t.co/bbq6eqIoiS
— Ethereum Classic (@eth_classic) January 7, 2019
Either way, the block reorganisation created a brief spell of substantial sell pressure for ETC and the asset traded lower across all exchanges once the news broke before recovering.
There has also been speculation that the situation is the result of organised intent to manipulate ETC’s price with Hong Kong-based OKEx exchange coming under the spotlight from some observers as, just days earlier ,they had provided facilities to short ETC.
Recent ETC ongoing 51% attack targeting OKEx exchange.
3 days ago, OKEx enabled ETC shorting capabilities. Coincidence?
— Honour Masters (@_itsanhonour) January 7, 2019