Greetings Eligius miners,

So, after some investigation over the past month or so, it turns out a couple of clients/addresses were involved in a “block withholding attack” against Eligius which has cost us an estimated 300 BTC, and likely miners of other pools as well. A block withholding attack is where a miner submits low difficulty shares but does not submit block solutions— so they appear to be working for the pool and continue to get paid while not actually doing useful work for the pool.

It is unknown how many other pools they’ve executed this attack against. While withholding attacks are detectable, they are not possible to prevent: the risk of block withholding is inherent in how Bitcoin pooling works. Since the attacker does not gain any direct benefit by performing the attack it is usually assumed to not be a serious risk. A withholding attacker can’t profit, except through indirect effects like making a pool look less “lucky” and driving miners to other pools.

My guess is that they never expected to get caught and suffer income loss as a result of their attack.  But, once they were caught, I put a filter in place to block them from the payout queue (similar to the block on known MtGox addresses). Eligius’s offline wallet now has roughly 200 BTC work credits held from the payout queue under the attacker's addresses, that we have stopped them from stealing.

When they noticed, weeks later, they contacted us complaining.  We asked them to sign messages to verify they were in fact in control of the addresses in question including asking them to include a real name and location in the signed message, refusing to discuss it until they had done so.  They eventually responded around the Memorial Day US holiday weekend.  Before we were able to respond (everyone has been extra busy as you all know), they threatened putting a 200 BTC bounty on hacking Eligius. More recently, their behaviours have extended to additional ultimatums, arbitrary deadlines, demanding 1164%-APY interest on the payout, etc.

Suffice it to say, communications with the attacker have been less than productive.

My original plan was to return the coins we have held in offline storage to the rightful owners— the miners who were submitting real work and were affected by the withholding attack— by paying towards shelved shares accrued during that time period (doing this is non-trivial due to security measures in place). This is still my intention, as I have no real inclination to yield to the demands and threats made by this attacker who has cost all of us quite a bit. It has unofficially been decided that if it came down to it, Eligius would shut down before being forced to pay any attacker of any kind any amount whatsoever.

In any case, I wanted to make sure I posted the details of this before the attacker attempts to take the public FUD route, and possibly get some constructive opinions on how to actually proceed with this.  

I will be posting all details we have about this soon.  For now, the two addresses I have filtered from the payout queue are 17JkL94B2ngJg4QQZuiozDQjnxXB6B7yTc and 1Gu8zxRi8cyENV8CQe52D7QEsiZ7ruT73u.

Rest assured that there is no need to be concerned about their threats.  Eligius is the second oldest mining pool and is also one of the few remaining pools which has never had any loss of bitcoin from any type of hack.  The reason there have been no successful hacks is because we take security very seriously.  There really are no possible methods for such an attack with Eligius.  While I won't reveal any of the specific security measures in place, even if an attacker were to somehow compromise any or even every single Eligius server, keep in mind that there are no funds stored on any online machine for them to steal anyway.  Other data is protected and verified by remote machines as well.  The pool will simply be cut off from the world pending my personal review if anything important were actually manipulated. As previously noted, the offline wallet requires coordination between both myself and Luke-Jr, and also very shortly, after completing some testing, a confidential third party.

I am taking this very seriously, and I'll be monitoring the pool as closely as possible.  Measures are also being taken to further harden our already very good existing security as well. If  My assumption is that the attacker is not going to take kindly to being publicly outed.

Thanks,

-wk

P.S. - This is unrelated to any of the stats issues that have occurred. (Server migration for the new web server is still under way…)