Blackmail is Behind Multi-Million ETH Transfer Fees, Say Researchers

Researchers have concluded that the recent Ether transfers that spent over $5 million in gas fees are the result of hackers trying to extort a compromised exchange.

Over the past week, the crypto community has been left befuddled by three small Ether 

 transfers that incurred millions of dollars in fees.

However, new reports have given weight to speculation that the seven-figure fees may have been deliberately spent as part of a blackmail scheme targeting a cryptocurrency exchange, with Chinese blockchain analysis firm PeckShield concluding that the transactions were likely resulting from extortion attempts.

Seven-figures ETH fees attributed to extortion

On June 12, Chinese media outlet Chainnews reported that analysis firm PeckShield has concluded that the string of multi-million dollar fees that were paid by hackers seeking to ransom a cryptocurrency exchange.

The report speculates that the exchange had been compromised in a phishing attack, allowing hackers to gain control over permissions for many of the platform's operational functions, including its servers. 

While the implementation of multi-sig restrictions prevented the attackers from draining the exchange’s funds to wallets under their control, they are able to make transfers to whitelisted addresses — determining the gas fees paid on said transactions.

As such, the researchers believe that the hackers are threatening to empty the exchange’s wallet if they are not paid a bribe, with PeakShield asserting 21,000 ETH remains in the wallet under the hackers’ control.

One wallet pays $5m to move 355.5 ETH in 24 hours

The first multi-million dollar transfer fee occurred on June 10, with $2.6 million in fees being paid to move just 0.55 ETH. Within 24 hours, a second transfer of 350 ETH was made from the same wallet, again spending $2.6 million in gas.

The following day saw the Ethereum network process a third curious transfer, this time from a different wallet. The transaction paid 2,310 ETH to move 3,221 Ether.

The obscure transfers elicited an array of theories from members of the crypto community seeking to explain the seven-figure fees, attributing the transactions to vengeful actions of a former exchange employee, fat-fingered human error, or a bug in a money-laundering bot.