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Parity Accident: $300 Million in Ether Lost for Good

Have you heard about the accidental freeze of $300 million worth of Ether that happened to the Parity wallet? Already called the biggest cryptocurrency loss in the short life of cryptocurrencies, this event is not a classical hack. The money was not actually stolen but “destroyed by accident”, as reported by The Guardian.

Related Story: Monero Cryptocurrency to Follow Bitcoin in Criminal Popularity?

How a Planned Redesign of Parity’s Wallet Leads to the Freeze of Millions of Ether

What did Parity’s developers say? Apparently, an investigation into a recent incident which ended in the loss of $32 million (stolen from wallet accounts in Parity’s Ethereum Wallet software) worth of Ethereum has led to a planned redesign of the wallet’s infrastructure and implementation.

What happened? On November 6, Ethereum user devops199 shared he had “accidentally” made himself the owner of a contract, which consecutively, made him the owner of all wallets related to the contract.

It then became evident that while trying to fix a bug that caused the theft of the above-mentioned $32 million, Parity left a second bug in its systems. This bug allowed the devops199 user to become the sole owner of all available multi-signature wallets.

The user, however, didn’t do anything on purpose as he triggered the bug by accident. When Parity’s developers realized their huge mistake, they tried to fix the damage by deleting the code that transferred ownership of the funds. What happened however was rather unexpected – their action actually locked all the funds in the wallets. Permanently. With no way to restore access to them.

Related Story: Ethereum Hack: $8.4 Million Stolen from Veritaseum ICO

According to Parity’s security bulletin, all users with assets in a multi-sig wallet created in Parity Wallet that was deployed after 20th July are affected.

We very much regret that yesterday’s incident has caused a great deal of stress and confusion amongst our users and the community as a whole, especially with all the speculation surrounding the issue. We continue to investigate the situation and are exploring all possible implications and solutions“, the company shared, adding that “Blockchain and related technologies are a vanguard area of computer science”.

Milena Dimitrova

An inspired writer and content manager who has been with SensorsTechForum since the project started. A professional with 10+ years of experience in creating engaging content. Focused on user privacy and malware development, she strongly believes in a world where cybersecurity plays a central role. If common sense makes no sense, she will be there to take notes. Those notes may later turn into articles! Follow Milena @Milenyim

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