QuadrigaCX Contract Error: Difference between revisions
(Created page with "{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/quadrigacxcontracterror.php}} It’s easy to forget the level of trust that Quadriga had in the market. The top upvoted comment reads “thank you for the statement and transparency and sharing all details”. Given failures and many hacking incidents, smart contracts should in general not be relied upon, and an exchange should always have redundancy and auditing checks built in for every single s...") |
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{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/quadrigacxcontracterror.php}} | {{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/quadrigacxcontracterror.php}} | ||
{{Unattributed Citations}} | |||
It’s easy to forget the level of trust that Quadriga had in the market. The top upvoted comment reads “thank you for the statement and transparency and sharing all details”. Given failures and many hacking incidents, smart contracts should in general not be relied upon, and an exchange should always have redundancy and auditing checks built in for every single system. While some issues may be seen as inevitable, having an issue persist for 3 days without being noticed is troubling. While there are many steps which could have been taken to prevent or notice the issue sooner, and this incident did contribute to the depletion of reserves, it’s not the reason anyone ultimately lost their funds. This type of failure is very challenging to regulate, already in the best interest of the exchange to avoid, and rare compared to other types of failures which can occur. The exchange needs to transparently cover this shortfall, with the assistance of any hot wallet insurance. | It’s easy to forget the level of trust that Quadriga had in the market. The top upvoted comment reads “thank you for the statement and transparency and sharing all details”. Given failures and many hacking incidents, smart contracts should in general not be relied upon, and an exchange should always have redundancy and auditing checks built in for every single system. While some issues may be seen as inevitable, having an issue persist for 3 days without being noticed is troubling. While there are many steps which could have been taken to prevent or notice the issue sooner, and this incident did contribute to the depletion of reserves, it’s not the reason anyone ultimately lost their funds. This type of failure is very challenging to regulate, already in the best interest of the exchange to avoid, and rare compared to other types of failures which can occur. The exchange needs to transparently cover this shortfall, with the assistance of any hot wallet insurance. | ||
This exchange or platform is based in Canada, or the incident targeted people primarily in Canada. | This exchange or platform is based in Canada, or the incident targeted people primarily in Canada. | ||
<ref name="messari-81" /><ref name="kylegibson-86" /><ref name="bitcoinexchangeguide-218" /><ref name="reddit-233" /><ref name="coindesk-234" /><ref name="coinrivet-235" /><ref name="reddit-236" /><ref name="verdict-237" /> | |||
== About QuadrigaCX == | == About QuadrigaCX == | ||
| Line 23: | Line 25: | ||
Don't Include: | Don't Include: | ||
* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed. | * Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed. | ||
* Anything that wasn't reasonably knowable at the time of the event. | * Anything that wasn't reasonably knowable at the time of the event. | ||
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|- | |- | ||
|June 1st, 2017 12:00:51 AM | |June 1st, 2017 12:00:51 AM | ||
| | |Main Event | ||
| | |Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. | ||
|- | |- | ||
| | | | ||
| Line 58: | Line 55: | ||
== Total Amount Lost == | == Total Amount Lost == | ||
The total amount lost | The total amount lost has been estimated at $14,700,000 USD. | ||
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie? | How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie? | ||
| Line 69: | Line 66: | ||
== Total Amount Recovered == | == Total Amount Recovered == | ||
There do not appear to have been any funds recovered in this case. | |||
What funds were recovered? What funds were reimbursed for those affected users? | What funds were recovered? What funds were reimbursed for those affected users? | ||
| Line 80: | Line 77: | ||
== References == | == References == | ||
[https://messari.io/article/new-documents-link-quadrigacx-founders-to-liberty-reserve-money-laundering-operation Messari - Bitcoin & crypto price, news, charts, and research] (Feb 14) | <references><ref name="messari-81">[https://messari.io/article/new-documents-link-quadrigacx-founders-to-liberty-reserve-money-laundering-operation Messari - Bitcoin & crypto price, news, charts, and research] (Feb 14, 2020)</ref> | ||
[https://medium.com/@kylegibson/100-crypto-thefts-a-timeline-of-hacks-glitches-exit-scams-and-other-lost-cryptocurrency-873c87fd5522 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents] (Jan | <ref name="kylegibson-86">[https://medium.com/@kylegibson/100-crypto-thefts-a-timeline-of-hacks-glitches-exit-scams-and-other-lost-cryptocurrency-873c87fd5522 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents] (Jan 25, 2020)</ref> | ||
[https://bitcoinexchangeguide.com/bitcoin/scams-hacks/ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com] (Mar | <ref name="bitcoinexchangeguide-218">[https://bitcoinexchangeguide.com/bitcoin/scams-hacks/ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com] (Mar 5, 2020)</ref> | ||
[https://www.reddit.com/r/ethereum/comments/6ettq5/statement_on_quadrigacx_ether_contract_error/ Statement on QuadrigaCX Ether contract error : ethereum] (Mar 6) | <ref name="reddit-233">[https://www.reddit.com/r/ethereum/comments/6ettq5/statement_on_quadrigacx_ether_contract_error/ Statement on QuadrigaCX Ether contract error : ethereum] (Mar 6, 2020)</ref> | ||
[https://www.coindesk.com/ethereum-client-exchange-14-million Ethereum Client Update Issue Costs Cryptocurrency Exchange $14 Million - CoinDesk] (Mar 6) | <ref name="coindesk-234">[https://www.coindesk.com/ethereum-client-exchange-14-million Ethereum Client Update Issue Costs Cryptocurrency Exchange $14 Million - CoinDesk] (Mar 6, 2020)</ref> | ||
[https://coinrivet.com/brian-armstrong-believes-the-quadrigacx-fiasco-may-have-been-an-accidental-exit-scam/ Brian Armstrong believes the QuadrigaCX fiasco may have been an accidental exit scam - Coin Rivet] (Mar 6) | <ref name="coinrivet-235">[https://coinrivet.com/brian-armstrong-believes-the-quadrigacx-fiasco-may-have-been-an-accidental-exit-scam/ Brian Armstrong believes the QuadrigaCX fiasco may have been an accidental exit scam - Coin Rivet] (Mar 6, 2020)</ref> | ||
[https://www.reddit.com/r/BitcoinCA/comments/6esvv5/quadrigacx_did_you_just_lose_17_million_cad/ QuadrigaCX, did you just lose $17 million CAD ? : BitcoinCA] (Mar 6) | <ref name="reddit-236">[https://www.reddit.com/r/BitcoinCA/comments/6esvv5/quadrigacx_did_you_just_lose_17_million_cad/ QuadrigaCX, did you just lose $17 million CAD ? : BitcoinCA] (Mar 6, 2020)</ref> | ||
[https://www.verdict.co.uk/quadrigacx-timeline/ QuadrigaCX timeline: Every twist and turn in the bizarre crypto scandal] (Mar 6) | <ref name="verdict-237">[https://www.verdict.co.uk/quadrigacx-timeline/ QuadrigaCX timeline: Every twist and turn in the bizarre crypto scandal] (Mar 6, 2020)</ref></references> | ||
Revision as of 11:24, 16 February 2023
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It’s easy to forget the level of trust that Quadriga had in the market. The top upvoted comment reads “thank you for the statement and transparency and sharing all details”. Given failures and many hacking incidents, smart contracts should in general not be relied upon, and an exchange should always have redundancy and auditing checks built in for every single system. While some issues may be seen as inevitable, having an issue persist for 3 days without being noticed is troubling. While there are many steps which could have been taken to prevent or notice the issue sooner, and this incident did contribute to the depletion of reserves, it’s not the reason anyone ultimately lost their funds. This type of failure is very challenging to regulate, already in the best interest of the exchange to avoid, and rare compared to other types of failures which can occur. The exchange needs to transparently cover this shortfall, with the assistance of any hot wallet insurance.
This exchange or platform is based in Canada, or the incident targeted people primarily in Canada. [1][2][3][4][5][6][7][8]
About QuadrigaCX
"Earlier this week, we noticed an irregularity with regards to the sweeping process of incoming Ether to the exchange. The usual process involved sweeping the ether into a ETH/ETC splitter contract, before forwarding the ether to our hot wallet. Due to an issue when we upgraded from Geth 1.5.3 to 1.5.9, this contract failed to execute the hot wallet transfer for a few days in May. As a result, a significant sum of Ether has effectively been trapped in the splitter contract. The issue that caused this situation has since been resolved." “In order to call a function in an Ethereum contract, we need to work out its signature. For that we take the HEX form of the function name and feed it to Web3 SHA3. The Web3 SHA3 implementation requires the Hex value to be prefixed with 0x - optional until Geth 1.5.6. Our code didn't prefix the Hex string with 0x and when we upgraded Geth from 1.5.3 to 1.5.9 on the 24th of May, the SHA3 function call failed and our sweeper process then called the contract with an invalid data payload resulting in the ETH becoming trapped.” “While this issue poses a setback to QuadrigaCX, and has unfortunately eaten into our profits substantially, it will have no impact on account funding or withdrawals and will have no impact on the day to day operation of the exchange. All withdrawals, including Ether, are being processed as per usual and client balances are unaffected.” “Data from EtherScan shows that the contract in question currently holds 67,317.25 ETH – an amount worth roughly $14.7m at current ether prices.”
This exchange or platform is based in Canada, or the incident targeted people primarily in Canada.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
- Known history of when and how the service was started.
- What problems does the company or service claim to solve?
- What marketing materials were used by the firm or business?
- Audits performed, and excerpts that may have been included.
- Business registration documents shown (fake or legitimate).
- How were people recruited to participate?
- Public warnings and announcements prior to the event.
Don't Include:
- Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
- Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
The Reality
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
- When the service was actually started (if different than the "official story").
- Who actually ran a service and their own personal history.
- How the service was structured behind the scenes. (For example, there was no "trading bot".)
- Details of what audits reported and how vulnerabilities were missed during auditing.
What Happened
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
| Date | Event | Description |
|---|---|---|
| June 1st, 2017 12:00:51 AM | Main Event | Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. |
Total Amount Lost
The total amount lost has been estimated at $14,700,000 USD.
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?
Immediate Reactions
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Total Amount Recovered
There do not appear to have been any funds recovered in this case.
What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
Prevention Policies
Coming soon.
References
- ↑ Messari - Bitcoin & crypto price, news, charts, and research (Feb 14, 2020)
- ↑ 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents (Jan 25, 2020)
- ↑ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 5, 2020)
- ↑ Statement on QuadrigaCX Ether contract error : ethereum (Mar 6, 2020)
- ↑ Ethereum Client Update Issue Costs Cryptocurrency Exchange $14 Million - CoinDesk (Mar 6, 2020)
- ↑ Brian Armstrong believes the QuadrigaCX fiasco may have been an accidental exit scam - Coin Rivet (Mar 6, 2020)
- ↑ QuadrigaCX, did you just lose $17 million CAD ? : BitcoinCA (Mar 6, 2020)
- ↑ QuadrigaCX timeline: Every twist and turn in the bizarre crypto scandal (Mar 6, 2020)