Cryptocurrency wallet blunder freezes up to $280 million of Ethereum

Cryptocurrency wallet blunder freezes up to $280 million of Ethereum

The company said in a statement that it fixed the vulnerability that led to the July hack, but failed to catch another weakness that allows users to rewrite code and take ownership of wallets that don't belong to them.

An unidentified user accidentally locked up all of the recently-created digital wallets within Parity - a popular digital wallet provider - by deleting the code library required to use those wallets, according to a critical security alert posted to Parity Technology's blog on Tuesday. Parity has issued a new version of its code to fix future wallets, but the fix isn't retrospective, meaning that at least for now, it doesn't appear clear when or even if those affected will regain access to their Ethereum holdings.

Multi-sig wallets require the consent of multiple parties before transactions can be approved.

The user, "devops199", triggered the flaw apparently by accident.

Parity has not shared any official totals, but it said on Twitter that it believes that "the funds are frozen and can't be moved anywhere", adding that projections for the amount of ETH impacted were "speculative".

Effectively, a user accidentally stole hundreds of wallets simultaneously, and then set them on fire in a panic while trying to give them back.

"We are analyzing the situation and will release an update with further details shortly", the company promised.

Dominic Williams, founder of self-governing blockchain computer DFINITY, told us: "The Parity vulnerability was the result of an incorrectly-coded smart contract used by the Parity wallet to store tokens on the Ethereum network". The risk is that some of the community refuses to accept the change, resulting in a split into two parallel groups.

In July, one cryptocurrency company's coding error helped a hacker to steal $30 million of the world's second most valuable digital coin.

An estimated US$280 million worth of the cryptocurrency ethereum is now locked up thanks to one person's mistake.

The price of Ethereum dropped from roughly $305 to $290 after the news broke, but has since recovered to $300.

Each ether token is now worth roughly $300, according to data from CoinDesk.