A new investigation by an on-chain sleuth has revealed that the Ethereum Foundation may have been involved in the 2016 Gate Coin Hack, which resulted in the theft of more than 185,000 ETH and 250 BTC from the Hong Kong-based exchange.
The on-chain sleuth, who goes by the pseudonym of Boringsleuth, published a detailed report on X, where he traced the origin and destination of the stolen funds using blockchain analysis tools. He claims that he found evidence that some of the hacked ETH was sent to an address controlled by the Ethereum Foundation, and that the Foundation later sold some of the tainted coins on Kraken.
The Gatecoin Hack occurred between May 9th and May 12th, 2016, prior to at the onset of The DAO’s token sale & 1 Month Prior to The Dao Hack. Per Gatecoin’s official statement on May 14th, the hack resulted in losses of 185K Ethereum, valued at more than $460M today. At the time, Gatecoin “claimed” that the hacker was able to alter their own system to bypass their multi-sig cold storage, so that all inbound Deposits into Gatecoin went straight to their exploitable Hot Wallet.
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They list the 4 Hacker Eth address’ below involved in the Exploit, Among the 4 ETH address’, one address, 0x1342a0, was originally funded PRIOR to the exploit. Our focus in this thread is looking into who it was that funded this Hacker’s wallet, in hopes of gaining an idea of who it was that was behind the Hack.
Boringsleuth’s report is based on the assumption that the hacker used a smart contract to split the stolen funds into smaller amounts and send them to different addresses. He says that he identified the hacker’s contract by looking for transactions that had a high gas price and a low value, which indicated that they were used to deploy a contract.
He then analyzed the contract’s code and found that it had a function called split Funds, which took an array of addresses and amounts as inputs and sent ETH to each address accordingly.
Boringsleuth says that he tracked down all the addresses that received ETH from the hacker’s contract and found that one of them belonged to the Ethereum Foundation. He says that he verified this by comparing the address with the list of addresses that received ETH from the genesis block, which are known to be controlled by the Foundation.
He also says that he checked the balance history of the address and found that it received 2,000 ETH from the hacker’s contract on March 15, 2016, which was one day after the Gate Coin Hack.
Boringsleuth claims that he further followed the trail of the stolen ETH and found that some of it was sold on Kraken between April and June 2016. He says that he identified the Kraken deposit address of the Foundation by looking for transactions that had a high value and a low gas price, which indicated that they were used to transfer ETH to an exchange.
He then cross-referenced the address with Kraken’s API and found that it matched with one of the Foundation’s accounts. He also says that he checked the trading history of the account and found that it sold 1,337 ETH for BTC between April 4 and June 13, 2016.
Boringsleuth concludes his report by saying that he has contacted both Gate Coin and the Ethereum Foundation to inform them of his findings but has not received any response from either party. He says that he hopes that his investigation will shed some light on one of the biggest unsolved hacks in crypto history, and that he will continue to monitor the movement of the remaining stolen funds.
US SEC delays BlackRock’s Spot Ethereum ETF
Meanwhile, the US Securities and Exchange Commission (SEC) has postponed its decision on the approval of BlackRock’s Spot Ethereum ETF, a fund that would track the price of the second-largest cryptocurrency by market capitalization. The SEC said it needed more time to evaluate the proposal, which was filed by BlackRock in October 2023. The new deadline for the SEC’s decision is March 29, 2024.
BlackRock is one of the world’s largest asset managers, with over $9 trillion in assets under management. The company has been exploring the crypto space for a while, and already offers exposure to Bitcoin futures through some of its funds. However, the Spot Ethereum ETF would be the first of its kind to directly invest in the underlying asset, rather than derivatives.
The SEC has been cautious about approving crypto ETFs, citing concerns about market manipulation, volatility, custody, and investor protection. So far, the regulator has only approved Bitcoin futures ETFs, which trade on regulated exchanges and are subject to margin requirements and clearinghouse oversight. Spot ETFs, on the other hand, would hold the actual cryptocurrencies in custody, and would require the SEC to grant exemptions from some of its rules.
The crypto community has been eagerly awaiting the approval of spot ETFs, as they would provide a more convenient and accessible way for investors to gain exposure to the nascent asset class. Spot ETFs would also potentially boost the liquidity and price discovery of the underlying cryptocurrencies, as well as attract more institutional investors to the space.
However, the SEC’s delay is not surprising, given its history of postponing or rejecting crypto ETF proposals. The regulator has repeatedly asked for more information and feedback from the public and the industry on various aspects of crypto ETFs, such as valuation, liquidity, arbitrage, market surveillance, and investor education. The SEC has also indicated that it prefers a comprehensive regulatory framework for crypto assets before approving spot ETFs.
BlackRock is not the only company that is seeking to launch a spot Ethereum ETF in the US. Other firms, such as VanEck, WisdomTree, and Bitwise, have also filed similar proposals with the SEC, but have not received any response yet. Meanwhile, Canada has already approved several spot crypto ETFs, including Bitcoin and Ethereum ones, which have attracted significant inflows and trading volumes.
It remains to be seen whether the SEC will finally greenlight a spot Ethereum ETF in 2024, or whether it will continue to delay or deny such products. The crypto industry is hopeful that the regulator will eventually recognize the benefits and potential of spot ETFs and will align its stance with other jurisdictions that have already embraced them.
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