CoinMarketCap Suffers a Seeming Hack, Falsely Driving Crypto Prices to Tens of Billions

CoinMarketCap.com, self-dubbed "the world's most trusted cryptocurrency data authority," was hit with a shocking cyber failure or attack that artificially inflated individual crypto coins' values.

Late Tuesday afternoon, cryptocurrency pricing aggregation site CoinMarketCap.com experienced a major hack or systems failure that artificially sent coin and token prices skyrocketing to valuations in the tens of billions of dollars per unit. A screenshot taken at 4:34 p.m. EST showed that Ethereum had an erroneous listing of more than $75 billion per coin. Binance Coin was inflated to more than $13 billion, while Cardano jumped higher than $36 million per unit.

Nearly all crypto exchanges rely on pricing feeds for trading

Centralized and decentralized exchanges (DEXs) scrambled to remove the errant pricing feed from their trading platforms in an effort to prevent hyperinflated trades that could cost the exchanges mind-boggling losses. Most exchanges have trading "circuit-breakers" that suspend trading on crypto assets that spike out of range on preset algorithms to control such fraudulent behaviors, but it's not clear if all exchanges have such safety measures in place.

"This recent glitch is exactly why blockchain applications and smart contracts need to use decentralized oracle networks like Chainlink. Relying on a single oracle, or a single source of data, is a recipe for disaster that undeniably puts user funds at risk," wrote Sergey Nazarov, Co-Founder of Chainlink in an exclusive email response to The Ascent. "We use a decentralized network of oracle nodes, each pulling and aggregating data from multiple data sources, the trusted answers about price data that Chainlink provides across all of DeFi remained accurate and unaffected by this one large deviation."

CoinMarketCap acknowledged the pricing issues

At 5 p.m. EST, the official CoinMarketCap Twitter account posted a tweet to its 4 million followers confirming the pricing irregularities that reads: "Our website is currently undergoing Price Issues - The Engineering team is aware of incorrect price information appearing on CoinMarketCap.com. We are currently investigating and will update this status when we have more information."

Competing crypto market capitalization aggregation website CoinGecko.com seemed to be unaffected and had typical pricing information throughout the duration of CoinMarketCap's pricing problems. As of this writing, the situation for CoinMarketCap seems to have stabilized with normalized valuations.

The timing for this massive mishap is especially bad given that the Senate Banking Committee hearing earlier in the day was generally negative regarding stablecoins and crypto in general. However, it’s unlikely that many retail investors would be hurt by such inflated prices on cryptocurrency exchanges, given that the distorted prices would be out of their reach. It will be interesting to check the blockchain, when this is over, to see whether anyone successfully sold their tokens at sky-high -- yet highly fake -- valuations.