Coinbase Pays $250k to Hacker Who Potentially Saved the Market Billions

Last week, the cryptocurrency community on Twitter was triggered by a warning message from an anonymous hacker who claimed to have discovered a “market-nuking” bug on the Coinbase exchange.

The anonymous hacker who potentially saved the industry billions of dollars through responsible disclosure has received a $250,000 bounty from Coinbase.

Coinbase Fixes Market-Nuking Bug

The bug was described by the anonymous white hat “Tree of Alpha” as being related to Coinbase’s Advanced Trading platform. Unlike the simpler user interface for retail investors to buy and sell crypto, the Advanced Trading platform allows for more sophisticated trading tools and ordering methods.

However, Coinbase developers mistakenly shipped a bug that would allow users to sell assets that they don’t hold.

During his investigations, “Tree of Alpha” was initially surprised to learn they could sell “0.0243 ETH” to receive “0.0243 BTC” using the BTC-USD pair which they had not enabled for trading on their account.

Further tests revealed that the problem was more severe since users could place an order to sell 50 SHIB (worth $0.001) for 50 BTC, and this would be filled through Coinbase order books.

As the white hat hacker subsequently pointed out, the situation was potentially “market-nuking” since a black hat hacker would have utilized the strategy to gradually drain Coinbase’s order books and try to withdraw the assets. Black hat hackers could also have resorted to creating market panic around the bug with short positions on other exchanges to maximize profits.

The severity of the bug and the fact it could have potentially cost the market billions of dollars, has caused observers to question the $250,000 bounty.

In the meantime, industry participants can draw solace from the community-led efforts that led to quickly bringing the bug to Coinbase’s notice and resolving the issue before it indeed became a “market-nuking” incident.

Your crypto deserves the best security. Get a Ledger hardware wallet for just $79!

  • bitcoinBitcoin (BTC) $ 19,444.46 0.28%
  • ethereumEthereum (ETH) $ 1,327.47 0.69%
  • bnbBNB (BNB) $ 282.11 0.28%
  • xrpXRP (XRP) $ 0.481794 6.82%
  • solanaSolana (SOL) $ 33.68 1.51%
  • terra-luna-2Terra (LUNA) $ 2.43 1.64%