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Hacker Takes Away US$50 Million Worth of Ether that Lies Within DAO

The Decentralized Autonomous Organization (DAO), a virtual currency fund that relies on the ethereum blockchain, has suffered a sustained attack that has seen US$50 million of Ether, an alternative to Bitcoin, siphoned off, causing the price of the crypto-currency to plummet. The DOA was created as a utopian decentralized venture capital-style smart contract, enabling participants to gain voting shares in exchange for ether. Those who buy into the fund are able to vote on project proposals submitted to the DAO by third party contractors and share in the profits from the investment.

The attack most likely puts an end to the project DAO, which had raised US$160 million in the form of Ether. While the computer scientists involved in the project are aiming to tweak the code that underpins Ether in a way that will recover the money, the theft is nevertheless prompting a debate about the viability and principles of virtual currencies like Bitcoin and Ether. DAO's rely on smart contracts to cut out the middleman in digital transactions. Using sensors, code, and predetermined deal workflows, they track every unit of digital currency including Bitcoins and Ethers. They can trace how often the currency is traded and raise alerts if they detect suspicious activity.

News Characteristics

Date : Jun 18, 2016
Region : North America
Industry : Financial Service Providers
Function : Risk Management
Sub-Function : Cyber Risk