With deletion of one wallet, $280M in Ethereum wallets gets frozen

Enlarge / What’s in your Ethereum wallet? It might not matter right now. (credit: Getty Images)

Digital currencies and the wallets that hold them have become an increasingly attractive target for digital pickpockets, resulting in millions of real dollars’ worth of lost currency. A $50 million heist of Ethereum currency last year exploiting weaknesses in the cryptocurrency’s underlying software threatened to break the Bitcoin competitor. But a new security bug in a popular Ethereum wallet platform has caused what amounts to a bank freeze on scores of high-value wallets. Today, Parity Technologies Ltd., the developer of cryptographic “wallets” for the digital currencies Bitcoin and Ethereum, announced that an “accidental” triggering of a bug affecting certain Parity wallets had broken them, making it impossible to transfer Ethereum funds out of them.

As a result, 1 million ETH have become frozen in wallets—roughly $280 million (US) worth of digital currency. Of that, about $90 million belongs to Parity founder and former Ethereum core developer Gavin Woods’ Initial Coin Offering (ICO) Polkadot, according to Tuur Demeester, editor in chief at Adamant Research.

Critical Parity bug leaves +$150M in $ETH frozen, including $90M of Gavin Woods’ Polkadot ICO. Cue clamoring for new hard-fork bailout… https://t.co/loIkQmnuXz

— Tuur Demeester (@TuurDemeester) November 7, 2017

The bug specifically affects multi-signature wallets created with a digital contract after July 20. Multi-signature wallets have cryptographic security measures that require multiple users to sign a transaction in order for it to be processed and approved—an approach that allows for escrow contracts to control payments from accounts belonging to a group.