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In the wake of a 51% attack on ethereum classic (ETC), the investment manager who holds the cryptocurrency has collected information from investors seeking to understand if the underlying assets in the fund are safe, he learned CoinDesk.
On Monday, the day after the reorganization of transactions on the classic ethereum blockchain came to light, Grayscale Investments, the creator of Ethereum Classic Investment Trust (ETCG), claims to have sent e-mails in response to "some" customers asking for clarity what the attack meant. CoinDesk obtained a copy of an e-mail response to this request.
Grayscale said he had not sent a notification to all fund investors.
While providing a general explanation of how these attacks work, Matt Beck, a product and research developer at Grayscale, wrote in the e-mail:
"The greatest risk this entails is the integrity of the Ethereum Classic network, as people may be less inclined to accept ETCs due to the increased risk of double spending. inside the ETC Trust are not directly at risk of theft or double expense. "
In explaining the reason, Beck cited a quote in Breakermag last year from a developer of another cryptocurrency project, Vertcoin, who suffered a similar attack.
"The double expense can only be made by the original sender of the coins – so an attacker can only double his coins, not those of someone else", said the developer Vertcoin, Gert-Jaap Glasbergen in the article. "So the main risk of 51% attacks and reorg blockchain is with people [who] accepts the blockchain resource; and especially when they do it in large quantities in exchange for virtual goods or services that are not reversible ".
Beck also cited a CoinDesk column by Michael J. Casey on the Vertcoin incident, which found that 51% of the attacks are a risk faced by most of the work trial blockchains and that some are more vulnerable than others. depending on the amount of hashing power that protects the network.
Michael Sonnenshein, Grayscale CEO, told CoinDesk through a spokesperson:
"As is often the case with developments in the digital resource ecosystem, Grayscale has received requests from some investors on the recent 51% attack on the ETC network. We have provided investors who have contacted us with publicly available information explaining how they occur. these attacks, these types of network attacks and their implications are also described in the disclosure documents provided to all investors. "
As of December 31, the trust had $ 24.9 million of assets under management. Like CoinDesk, Grayscale is owned by the Digital Currency Group (DCG).
& # 39; Down hands & # 39;
Taking a step back, it is important to note that, despite the seriousness of the 51% attack, an exchange lost $ 200,000 as a result: the price of ethereum classic remained fairly stable, at least for the volatile standards of the crypto.
According to CoinMarketCap, it dropped from $ 5.49 on Sunday, just before the reorg became public, at a minimum of 7 days of $ 4.28 Thursday, a decline of 21%. Friday afternoon returned to $ 4.54.
The value of ETCG's shares monitored the decline in the currency during this period, from $ 9 to Monday midday to $ 6.78 Thursday before the rebound to $ 7.30 on Friday afternoon.
This relative market calm can help explain why Grayscale only sent his explanator to the few investors who asked rather than a broader shareholder communication.
Trust was launched in 2017 as a private placement. Therefore, only accredited investors can buy shares directly from Grayscale and must retain them for at least one year before redeeming them. In this sense, they are stuck for a while. Since May of last year, ETCG shares have been available for purchase or sale on OTCQX, an over-the-counter (OTC) market.
It seems that the grayscale has remained out of the discussions of the developer community on the attack. Yaz Khoury of the Ethereum Classic Cooperative, which supports the development of the protocol, said that although Grayscale provides a good amount of funds to its organization through trust, "in addition to providing financial help and advice to the Cooperative, they are really hands-from how we can help the community and the ETC ecosystem ".
Likewise, developer Cody Burns said of Grayscale: "They tend not to interfere in the development of projects, they are focused on finance."
Christine Kim contributed to the report.
Michael Sonnenshein on Consensus: Invest in the 2018 image through the CoinDesk archives.
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