Ethereum faces a bug problem, two exchanges cancel ERC20 Deposits

Ethereum Faces a Bug Problem, Two Exchanges Cancel ERC20 Deposits

According to recent reports, there is a bug in few ERC20 tokens, based on the ethereum network. An independent researcher on Medium claimed that more than a dozen token are susceptible to this bug.

As per CoinMarketCap, 90 percent of the $53 billion token market is made up by ERC20 tokens. After the circulation of the news, at least two exchanges, OKEx and Poloniex ceased all the ERC20 token deposits.

Earlier this year, few users of MyEtherWallet, an app for storing and sending Ether and Ethereum-based tokens, were attacked and looted. Reports suggest that hackers hijacked servers to execute the crime instead of causing problems directly in the app.

On Monday, Gary Gensler, former Commodity Futures Trading Commission Chairman, advised considering Ethereum’s Ether token as a security. It would clamp down the majority of exchanges that currently trade the second-largest crypto and may even wipe out a huge chunk of the market as investors panic.

Blocklink Ventures’ s Bart Michalczuk said, “Over the past 24 hours we did see some negative headline news that are potentially impacting the market, but we’ve gone up really fast by quite a bit, so corrections are to be expected.”

Crypto exchange OKEx suspended all deposits of ERC20 token after 12 smart contracts built on Ethereum were alleged of a serious bug. In its official statement, the Hong Kong-based exchange annexed the tokens as hackers used a newly-discovered smart contract bug called “batchOverflow” to breed “an extremely large amount of tokens.” These tokens were then deposited into a regular Ethereum account.

The third-largest crypto exchange in the world as measured by daily trading volume stated, “We are suspending the deposits of all ERC-20 tokens due to the discovery of a new smart contract bug – ‘BatchOverFlow.’ By exploiting the bug, attackers can generate an extremely large amount of tokens, and deposit them into a normal address. This makes many of the ERC20 tokens vulnerable to price manipulations of the attackers.”

The firm further added, “To protect public interest, we have decided to suspend the deposits of all ERC20 tokens until the bug is fixed. Also, we have contacted the affected token teams to conduct an investigation and take necessary measures to prevent the attack.”

Changelly, a cryptocurrency exchange service between digital currencies, have also followed the footsteps of OKEx by immediately suspending all ERC20 tokens.

It is not the first time researchers have recognized bugs in Ethereum based smart contracts. Blockchain experts have already warned about more than 30,000 defective smart contracts on the Ethereum Network.

In March 2018, Coinbase suffered a similar case of integer overflow when users were able to reward themselves with endless amounts of Ethereum. The issue was sighted by Dutch fintech firm VI Company that said, “if [one] wallets transaction in the smart contract fails all transactions before that will be reversed. But on Coinbase these transactions will not be reversed, meaning a person could add as much Ethereum to their balance as they want.”

If such bugs get repeatedly discovered in Ethereum’s network, then the second largest crypto will probably lose its coveted position.

Leave a Comment

Your email address will not be published. Required fields are marked *