Coinbase suspends Bitcoin SV trading after double spending attack
US popular cryptocurrency exchange Coinbase said it has ceased interactions with the Bitcoin SV after a wave of fear washed through the BSV community following yet another 51% attack.
In a blog post published Wednesday, the exchange said, “due to the 51% attack that has occurred on BSV today we are stopping all BSV trading.”
Bitcoin Association shared the news about an ongoing series of block re-organisation and double-spending attacks targeting Bitcoin SV on Tuesday. The Switzerland-based non-profit organization believes that malicious actors attempting to double-spend BSV coins are the same attackers that previously initiated similar hacks in June and July.
The Bitcoin SV infrastructure team said that one of the addresses connected with the attack was long associated with ransomware and other attacks on the BTC, BCH, and BSV chains. The team recommended “honest node operators” to mark the fraudulent chains initiated by the attacker as invalid.
Correction: the reorg was 100 (!) blocks deep wiping out 570k transactions. It was just our alert system that didn’t expect someone trying to revert the whole blockchain and stopped at 18. Oh well, there are some risks associated with transacting on low-hashrate blockchains.
— Nikita Zhavoronkov (@nikzh) August 3, 2021
The Bitcoin Association continues to collect evidence of the double spending attack and plans to file reports with law enforcement authorities to pursue legal action against the attacker. The organization has alerted exchanges to the indecent, but didn’t ask them to freeze deposits and withdrawals until the issue is resolved.
In response to the ongoing re-organisation attack on the #BSV network, Bitcoin Association recommends that node operators mark the fraudulent chain as invalid.
This will immediately return your node to the chain supported by honest miners and lock the attacker’s chain out.
— Bitcoin Association (@BitcoinAssn) August 3, 2021
The attack was first discovered analytics provider Coin Metrics’ blockchain security monitoring tool FARUM.
Double-spending attacks have become easier on Bitcoin SV due to the network’s known vulnerabilities, namely the limited number of nodes. Given this poor network security, BSV’s price lost more than 70% from its peak at $441 in April when it had its first halving. At the time, the event reduced its block rewards from 12.5 to 6.25 BSV, causing the hash rate to drop by 50% as many miners exited the network when the cryptocurrency’s price didn’t surge.
Bitcoin SV was forked out from Bitcoin Cash (BCH) in 2018, but it is suffering from the same vulnerability that was identified in the latter as the zero confirmation algorithm makes it vulnerable to this exploit.
Most recently, cold storage provider Gravity suspended both withdrawals and deposits from BSV, citing liquidity providers suspending access to the token’s liquidity.
Several crypto exchanges have also suspended BSV transactions last month. Huobi was the first to make this move, then OKEx and Bittrex followed suit after the asset’s blockchain suffered a 51% attack. The network was attacked on 8 July by an illegal block reorganization.
Still, there is a real possibility that more exchanges will delist the token following the last attack.