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The hacker responsible for stealing from the DAO has at last begun moving his loot, starting with a donation to the developers advancing Ethereum Classic.
Bitcoin scams and frauds
DAO, hackers, Ethereum, Ethereum Classic
The DAO hacker has moved his stolen Ethereum from the Ethereum Classic chain, donating part of it to the Ethereum Classic developers.
The move of the stolen funds from the DAO hack occurred earlier this week. As his first action with the funds the hacker sent 1,000 ETC, about $1,500, to the address associated with Ethereum Classic’s development team, leading to speculation that the initial hack might have been motivated by a desire to fork Ethereum (which ended up being a result of the hack).
The hacker exploited a vulnerability in the DAO’s smart contract and proceeded to drain the funds contained therein, making off with a grand total of 3.6 million Ether, then valued at $50 million. In a move to attempt a recovery of the stolen funds and to isolate the hacker’s gains, Ethereum was hard forked, giving rise to Ethereum Classic. The White Hat Team, a white hat hacker group, managed to recover 7 million ETC of the stolen funds, then valued around $16 million.
Since then, Ethereum Classic has gone through a speculative bubble, surging 300% early on and giving rise to speculation that it might achieve #3 status on the cryptocurrency charts. The Ethereum co-founder Vitalik Buterin has stated that he will never support Ethereum Classic, no matter how high it climbs. ETC has gained a community dedicated to its further development and potential, now partially funded by the DAO hacker.
In a world where digital currencies are relatively new and not protected by a central banking system, hacks of large exchanges are fairly common. In fact, one third of all major exchanges have experienced hacking thefts. This is in part due to exchanges maintaining hot wallets for moving customer funds, as opposed to a rapid cold storage model. While the recovery of stolen funds from hacks is generally a long shot, many cryptocurrencies operate on a public Blockchain with visible transactions, and, as such, funds can be traced to some extent, complicating a thief’s potential options for liquidation.
However, currencies such as Monero operating on private Blockchains are much more difficult to trace, meaning that an enterprising hacker could convert their ill-gotten gains to Monero in order to cover their tracks.
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