Hackers Blackmail Ethereum Users for $5 million, Says Report

Three Ethereum users have spent over $5 million in network fees within the past two days, in what a report has now tagged as blackmail.

In the past two days, one user on the ETH blockchain network paid a whopping $5.2 million in fees to make two small transactions, totalling less than $500. Another user paid $500,000 in fees for a similarly small transaction as well.

The three abnormal transactions have triggered blackmail or bug error speculations among crypto experts. According to Dovey Wan, the founding partner of Primitive Crypto, the absurd transactions are not caused by a bug in the blockchain but it is rather a message by a hacker. “A [wild] guess [is] certain exchange/wallet/ETH services is being “kidnapped” by [a] hacker,” he tweeted earlier on June 12.

According to PerkShield, a blockchain analytics company based in China, the transactions could be a “gas price blackmail attack launched by hackers.” The company claims that the hackers gained access to some accounts, but could not send funds out of these accounts to theirs, because of the accounts’ multi-sig function. This function requires multiple passwords to send funds.

However, the hackers found that the accounts had whitelisted addresses they could send funds to, without triggering the multisig function. Realising this, they began to send excessive gas fees, to blackmail the account owners into parting with money, for the transactions to stop.

The hacking method used is a classic phishing attack where the hackers use fake websites to steal login information then send little amounts but huge fees.

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