November 8, 2026

Capitalizations Index – B ∞/21M

Bitcoin Cash Vigilante ‘Liquidates’ Upgraded Blockchain Attacker’s Funds

Bitcoin cash vigilante ‘liquidates’ upgraded blockchain attacker’s funds

Bitcoin Cash Vigilante ‘Liquidates’ Upgraded Blockchain Attacker’s Funds

Bitcoin cash vigilante ‘liquidates’ upgraded blockchain attacker’s funds

By CCN: An attempted disruption of the Bitcoin Cash blockchain resulted in a negative outcome for the attacker. A BCH tinkerer with Reddit username NilacTheGrim boasted yesterday that he had “liquidated” the crypto funds belonging to the would-be blockchain bandit.

Weak Address Security Come Back to Bite bitcoin Cash Attacker

To do so, he found a flaw in the wallet security model used by the attacker, who has not identified himself or been identified at press time.

“The attackers used p2sh addresses that had easily guessable scriptSigs (they lacked a signature altogether to redeem). […] I ended up liquidating about ~1.2BCH of their funds just now […] So you will see the mempool now has lots of tx’s and is 18MB full as of the time of this writing. These tx’s are all the special tx’s that have a lot of sigops that I made to liquidate (take) the attacker’s funds.”

There is no government regulating the interactions on bitcoin Cash or, for that matter, bitcoin Cash. People can do whatever is possible within the rules of consensus. As such, Changpeng Zhao’s idea to “reorganize” the bitcoin blockchain was taken very seriously by people who understand there’s no stopping him – if he has the ability.

Spam of a New Kind

The intent of the initial attack was apparently to disrupt normal operations for bitcoin Cash. The attacker injected thousands of invalid transactions into the mempool and made it difficult for anyone to make regular transactions. The attack coincided with a scheduled network hard fork.

Notably, BitcoinXT recently dropped off the Bitcoin Cash network, resigning from development efforts in protest of such regularly scheduled hard forks.

The origin of the bug which led to the attack was not immediately clear. Some observers, such as Cornell Professor Emin Gün Sirer, claim the bug was born of the block template code.

Another spectator has a different take on the attack, which makes more sense. It’s possible to submit transactions to the mempool which you know will never make it into blocks.

Mining pools reacted to the spam attack by mining empty blocks and forking away from the chain that held them in the mempool (submitted transactions not yet included in blocks).

Some miners were forced to mine empty blocks due to their design, which is explained later.

This new fork gave some the impression that Bitcoin Cash was in a state of flux, with two equally valid blockchains existing. Perhaps a rush to judgment, the conclusion drew ire.

bitcoin Cash’s Four-Hour Emergency Response

bitcoin ABC, the dominant development team in bitcoin Cash, deployed a patch for its nodes within four hours of the initial attack.

Nevertheless, several Twitter users with a dislike of bitcoin Cash took the opportunity to poke fun, take shots, and generally denigrate the cryptocurrency.

A similar attack on bitcoin would have had a much more significant impact, the limited space of blocks being a primary issue in its functionality. However, the attack would have been much more expensive to conduct. The attack is not currently possible in bitcoin, as far as we know, but bugs are introduced and patched regularly in open source development.

Origins of a Spam Flood

This particular exploit was the result of code activated last November. A new feature in bitcoin Cash made it possible, and whoever discovered it opted not to report it but waited until a scheduled hardfork (“upgrade”) to execute an attack. The attacker likely hoped his actions would have a greater disruptive effect on bitcoin Cash, which leads one to believe they are not a supporter.

Here is a brief explanation of the bug:

“When accepted to the mempool, the transaction is recorded along with its number of sigops.

“[…] During the acceptance of the mempool, the transaction’s scripts are parsed and each occurrence of a sigop is counted. When OP_CHECKDATASIG was introduced during the November upgrade, the procedure that counted the number of sigops needed to know if it should count OP_CHECKDATASIG as a sigop or as nothing (since before November, it was not a signature checking operation). The way the procedure knows what to count is controlled by a “flag” that is passed along with the script. If the flag is included, OP_CHECKDATASIG is counted as a sigop; without it, it is counted as nothing. Last November, every place that counted sigops included the flag EXCEPT the place where they were recorded in the mempool–instead, the flag was omitted and transactions using OP_CHECKDATASIG were logged to the mempool as having no sigops. […]

“The number of sigops for transactions using OP_CHECKDATASIG is recorded as zero–but only during the mempool step, not during any of the other operations. So these OP_CHECKDATASIG transactions can all get grouped up into the same block. The prototype block builder thinks the block should have very few sigops, but the actual block has many, many, sigops. […] However, since the new block has too many sigops included in it, the mining software starts working on an empty block (which is not ideal, but more profitable than leaving thousands of ASICs idle doing nothing). [T]he empty block is mined and transmitted to the network. It is a valid block, but does not contain any other transactions other than the coinbase. Again, this is because the prototype block failed to validate due to having too many sigops.”

If we were to name the attack, we might say “sigop flood attack,” as that is essentially what happened: mining nodes were overloaded with sigop validations, which led them to mine blocks with no valid transactions.

The bitcoin Cash vigilante discovered a weakness in the addresses used by the attacker. He then conducted a similar move to a “sigop flood” to drain the balance of the attacker’s wallet. The transactions will take days to clear, due to the subsequent patch of the bitcoin Cash network.


Published at Fri, 17 May 2019 12:41:28 +0000

Previous Article

Bitcoin Flash Sell Off Lowers Price – Trustnodes

Next Article

Haasbot Is an Automated Trading Tool for the Crypto Market

You might be interested in …

SEC Weighs In on ICO Tokens as Securities; Ether Still Labeled “Currency”

SEC vs ICO tokens

It was only a matter of time before the U.S. Securities and Exchange Commission (SEC) moved in on the “Wild West” world of Initial Coin Offerings (ICOs), which has sent the blockchain world reeling. Yesterday, it finally did with its announcement that virtual tokens like the ones sold by the DAO are securities and now subject to federal securities laws.

The SEC statements reads in part: “federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”

The SEC is cautioning investors not only to be aware of the risks but also to ensure that those looking to get involved do their own due diligence as well.

One important distinction that seems to have emerged in the report, however, is that while DAO tokens are securities, Ether itself is still in the clear.

The Report seems to distinguish between Ether, labeled a virtual currency, and DAO Tokens, labeled a security. Market participants may take comfort in this distinction, as it supports the view that not all blockchain tokens are securities under the U.S. Federal Securities Laws. – Devebois & Plimpton LLC

The announcement, nevertheless, is expected to have an impact on token sales. As a result of this recent development, it is important to note that any company looking to raise capital through ICOs in the U.S. will have to take this SEC decision into consideration.

On the legal side, Louis Lehot of DLA Piper told bitcoin Magazine: “Those considering a token offering would be well served to reconsider their plans and ensure compliance in all of these areas, from tip to tail.”

Lehot said: “The SEC’s release is most notable on its survey of many of the corollary issues which can be triggered under the federal securities laws when a token is deemed a security, from registration or exemption, whether general solicitation is permissible, to crowdfunding, to after-market trading and even addressed compliance issues under the 1940 Act.”

What Is “The Howey Test”?

The Howey test is the leading definition of an investment contract, referring to the U.S. Supreme Court case SEC v. W.J. Howey Co. Under the Howey test, an investment contract is “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

According to Jaron Lukasiewicz, CEO of stealth blockchain project WORKFLOW and former investment banker, “The standard test is an investment in a business where the buyer has a reasonable expectation of profits based on the efforts of others. It should come as no surprise that the SEC found that buyers of the DAO Token purchased a security.”

He explained that the key feature of the DAO token was indeed an expectation of profit if the investments made by the DAO were successful, and so DAO tokens were expressly sold as an investment.  

Lukasiewicz added: “Unlike a token such as Ether, the DAO token had no other utility.  Many people in the industry at the time were concerned about the DAO for the reasons stated by SEC.”

Marco Santori, partner at Cooley LLP and legal ambassador for the Delaware Blockchain Initiative, shared an excellent summary of the report’s key points on Twitter, touching chiefly on the distinction between tokens that are and are not securities.

santori screenshot

Arnold Spencer acts as general counsel for the Coinsource network of bitcoin ATMs. He summed up the distinction in a succinct analogy:

If you buy an interest in a golf course to make money from the business, it is a financial investment and therefore a security. If you join a golf club to play golf, it is not a financial investment and not a security.

Important — but Not Surprising

Ron Chernesky, CEO of social trading platform investFeed, said that he welcomes the SEC announcement, although he also noted that “before yesterday’s announcement, it was common knowledge that ICOs have been enveloped in a regulatory [gray] area.”

It would appear that that gray area has now shrunk somewhat.

The post SEC Weighs In on ICO Tokens as Securities; Ether Still Labeled “Currency” appeared first on Bitcoin Magazine.

Bitcoin my opinion

bitcoin my opinion

bitcoin my opinion EN English (UK) EN English (IN) DE Deutsch FR Français ES Español IT Italiano PL Polski SV Svenska TR Türkçe RU Русский PT Português ID Bahasa Indonesia MS Bahasa Melayu TH ภาษาไทย […]

Dsc03453

DSC03453

DSC03453Etherium Meetup Hong Kong organized by Jehan Chu. Vitalik Buterin test codes (illustrates) one of the features of Caring Currency using Etherium. Photo: Philip McMaster, Caring Currency – World Sustainability Project www.CaringCurrency.com www.RepublicOfConscience.com www.WorldSustainability.OrgBy Philip […]