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Coinbase Bug Causes Theft of Unlimited ETH

News

Wallet provider compensated for discovering the exploit

According to report made public on Mar. 21, Biggest United States exchange service and digital wallet provider Coinbase has compensated a Dutch company with a $10,000 prize after it uncovered a smart contract glitch enabling users to steal “as much as they want” in Ethereum (ETH).

The problem, which the ditch fintech firm, VI Company made known to Coinbase on the 27th of December of last year, majored on utilizing a smart contract that involved some faults with a wallet.

Technically, Coinbase users were able to credit their accounts with numerous ETH funds. “By using a smart contract to distribute ether over a set of wallets you can manipulate the account balance of your Coinbase account,” the VI Company explained in the report. The company proceeded by saying:

“If 1 of the internal transactions in the smart contract fails all transactions before that will be reversed. But on Coinbase these transactions will not be reversed, meaning someone could add as much ether to their balance as they want.”

The United States’ largest exchange and wallet provider has been hit with numerous technical challenges for almost a year. Since the massive crypto-rush in mid-2017, which led to a significant influx of users to the exchange, Coinbase’s technological capabilities have been put under intense pressure, leading to delayed and missing funds, system outages amidst other issues.

Despite assuring it will beef up performance, the effect of a bug that could have technically drained billions of dollars in digital currency seems to have caused a huge amount of unfavorable criticism towards the company, and company’s recent announcement about finding a is unlikely to change public sentiment.

Coinbase commented on the report, saying: “Analysis of the issue indicated only accidental loss for Coinbase and no exploitation attempts.”

This isn’t the first time this type of loophole has affected major businesses dealing with cryptocurrency. In January, for instance, there was a report regarding a website malfunction at Overstock.com, which enabled users to pay and request refunds in either Bitcoin or Bitcoin Cash, leading to huge profits for some users. For what it’s worth, Overstock and Coinbase have something in common, and that is their merchant integration API.

Jacob Lucas

Jacob Lucas

Jacob has been active in the cryptocurrency markets since 2010, specializing in Bitcoin. He received education as Certified public accountant, specializing in taxes and cost management. Looking for alternative sources of income due to some personal struggles Jacob discovered Bitcoin 2010, showing some commitment and first to learn and get all the basics. Jacob made his fists investment in bitcoin in 2011 and has been successful in the field. Writing in the field is part of Jacob’s commitment to share knowledge with others.

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