An implementation bug has allowed someone to make a profit of more than $400,000 after creating roughly 370,000 units of the Zcoin cryptocurrency, users were told on Friday.
Zcoin (XZC), worth approximately $2 per unit, is an implementation of the Zerocoin protocol, which aims to provide fully anonymous currency transactions. Zerocoin has also been used to create a new protocol called Zerocash and the ZCash digital currency.
A typo in the code allowed an attacker to fraudulently obtain Zcoins. They managed to create roughly 370,000 coins and sold a majority of it for a profit of approximately 410 bitcoins ($435,000).
Zcoin representatives pointed out that the exploit was possible due to a bug in the code and not a cryptographic weakness, and that the anonymity provided by Zerocoin has not been compromised. Zcoin said the damage was “mostly absorbed by the markets.”
“From what we can see, the attacker (or attackers) is very sophisticated and from our investigations, he (or she) did many things to camouflage his tracks through the generation of lots of exchange accounts and carefully spread out deposits and withdrawals over several weeks,” said Zcoin’s Reuben Yap.
Ian Miers, one of the founders of ZCash, has provided a likely explanation for what went wrong. Miers believes it was probably a bug that resulted from copying and pasting code.
The bug was addressed over the weekend and pools and exchanges have been instructed to update their code. Zcoin said no coins will be forfeited or blacklisted, despite the severity of the hack.
Incidents involving cryptocurrencies are not uncommon. In June 2016, the value of the Ethereum digital currency plummeted after someone exploited a vulnerability in the DAO.
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