By Solomon Odunayo
The co-founder of Ethereum (ETH), Vitalik Buterin has recently explained the possible cause of huge losses experienced by an Ethereum whale in two transactions in about 24 hours interval.
As reported by Herald Sheets, the crypto whale transferred $133 in ETH, with a $2.6 million transaction fee. As if that was not enough, about 24 hours later, the same amount was deducted from the same address as transaction fee after effecting 350 ETH transfer.
This implies that the owner of the Ethereum address lost 21,336 ETH worth $5.2 million at the time of the incidents. However, Vitalik Buterin has pointed out that the exorbitant transaction fees may actually be blackmail.
Vitalik Buterin Explains the Possible Cause of the Million-Dollar Fees
Going by the assertion of the co-founder of Ethereum (ETH), Vitalik Buterin, the million-dollar transaction fees that have been trending in the crypto community over the past 2 days “may actually be blackmail”.
While stressing the theory of his assumption, he said the sending address possibly belongs to a cryptocurrency exchange that has been partially dominated by hackers, who have “captured partial access to exchange key”, stating that since they don’t possess the full key, “they can’t withdraw but can send no-effect txs with any gas price.”
Due to this fact, the hackers would take advantage of their ability to send transactions of the kind and burn all funds via transaction fees unless compensated.
Vitalik Buterin shared this, “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.”
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
In response to his explanation, a crypto community member identified on Twitter as Tal Be’ery asked, “does not make sense. If this was the case I would expect the exchange to shutdown operation to protect itself after first huge fees Tx.”
Responding to the question, Buterin said, “Perhaps the exchange lost all control of access to the key.”
Perhaps the exchange lost all control of access to the key.
— vitalik.eth (@VitalikButerin) June 12, 2020
Another question directed at Buterin says, “But how this key would look like? It looks like it is a normal Ethereum account – no smart contracts involved.”
Vitalik Buterin responded thus:
“The key could be stored in some kind of cloud server instance that has a non-root account that’s capable of only withdrawing to particular addresses?”
The key could be stored in some kind of cloud server instance that has a non-root account that's capable of only withdrawing to particular addresses?
— vitalik.eth (@VitalikButerin) June 12, 2020