Massive ETH Transfer Fee Scandal Worth Millions Reportedly Involved Blackmail

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The cryptocurrency community was left in shock after it was revealed that there were recently three Ether (ETH) transactions with outrageously high fees amounting to around $5.2 million.

Researchers from PeckShield looking into the matter did not disclose the identity of the cryptocurrency exchange involved. However, they claim that the transfer involved hackers who are now blackmailing the crypto exchange to access the funds. They believe that the exorbitant transfer fees amounting to millions. The research firm revealed that the hackers may have hit a brick wall trying to transfer the funds into their wallets.

The hackers were reportedly unable to achieve their objective thanks to the numerous passwords required to facilitate the processing of cryptocurrency transactions. Ethereum founder Vitalik Buterin pointed out that the hackers resorted to blackmail to access the funds.

“Hackers captured partial access to exchange key; they can’t withdraw but can send no-effect txs with any gas price. So they threaten to ‘burn’ all funds via tx fees unless compensated,” stated Buterin.

 The most expensive transfer fee ever

The hackers reportedly transferred just 0.55 ETH, which was charged an absurdly high fee of $2.6 million on June 10.  Another transfer involving a similar transfer fee of $2.6 million was conducted before the end of 24 hours after the first transfer. This time, the transaction involved 350 ETH. Another transaction was the next day in which the hackers paid 2,310 ETH to transfer 3,221 Ether.

Such high fees were obviously not going to go unnoticed. There was some speculation suggesting that the seven-figure transfer fees were part of a system error, while others suggested that it was part of a money-laundering scheme. There was also speculation that it could have been one of the former employees’ actions at the exchange.

Researchers say that the hackers used phishing to access the exchange’s funds. They were also able to send funds trusted cryptocurrency wallets on the exchange. However, they did not manage to send the funds to their own wallets, suggesting that the attempted hack did not go as they expected.

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