It’s the story that keeps on giving. For all the facts without an opinion you should read my friend Jack’s post, I helped him a bit finding the evidence and spreading the word about his article. His post describes everything without any bias and with plenty of proof. Mine will have a slight bias in a certain direction. I also want to give some extra credit to Reddit user DeviateFish_ who has been asking all the right questions and managed to get a lot of extra information.

The title I gave to this article might sound harsh, but lets see what a “respected” Ethereum dev says about Ethereum Classic:

And that while the only thief so far on the ETC chain was from the RHG.

Short Recap of prior actions:

In case you aren’t completely up to date this is what happened after the DAO was hacked:

To avoid the “attacker” draining more Ether from the DAO a group of “white hat hackers” was formed which was called the Robin Hood Group (RHG). They “securely” drained the DAO of the leftover funds and promised to keep it safe until after the hard fork.

I hear you think now “Wow WP, that’s awesome news, these guys are true heroes.” Wait, we’re just getting started.

So the funds were in a child dao controlled by the RHG. That was it for then, the Ethereum foundation pushed the hard fork to bail out the Slockit and Ethereum devs, despite not having consensus at all, and that caused the Ethereum vs Ethereum Classic split. For the record: there has been some more information spread that many Ethereum devs didn’t invest in the DAO. I’m sure not all did, but many did, including Vitalik.

The DAO in Ethereum was replaced by a simple withdraw contract, so everyone who had DAO could withdraw their Ether from it. Of course the people that paid extra Ether, because they invested in the DAO at higher prices, were still getting screwed over. And the Ethereum Foundation has made no effort into distributing that Ether fairly, but that’s a whole different (shady) story. (They will probably use it for some “sound financial planning” and dump it on investors)

The DAO in Ethereum Classic is a different story. There everything basically stayed the same, the hacker is still working his way through the child dao’s to secure his stolen funds. (I’ve read somewhere that it would be around 2nd of September, not sure how accurate that is) But on this blockchain the RHG did still control all the Ether that they “securely” drained.

On Ethereum Classic:

There seems to be a lot of confusion and fud when it comes to Ethereum Classic and its values. In particular a group of dedicated Ethereum users have been spreading false information. I suggest that you read the Ethereum Classic Declaration of Independence. Those Ethtards like to use the “code is law”-argument but they just don’t get it or don’t want to get it. I think this reddit comment describes it best:

The perfect example of this is Emin. He’s obviously a smart guy and I had a lot of respect for him until a while back, but he keeps bringing it up, trying to make a non-existent point about it. There are other Ethereum devs that are trying to make the same non-existent point, why would you even talk about it, unless you feel threatened or desperate?

What happened with the Ether in the RHG child DAO?

Obviously there were people tracking the funds, a few days ago the Ether (ETC) from the RHG hack was withdrawn out of the DAO. Needless to say that this ETC belongs to the DAO investors who held the DAO tokens at the time of the fork, since they invested ETH (before the fork) in it, so from any legal point of view they are the owners and there is no way to argue against that.

This is where it gets complicated. A lot of people already sold their DAO or withdrew the Ether (ETH) through the withdrawal contract on the ETH chain.

A Reddit post appeared by Jordi Baylina:

This all sounds very noble, he sounds like a reasonable guy right? Keep reading.

What actually happened is that the RHG decided to go rogue and send the coins to different exchanges.

As you can see in the picture above 2.9 million ETC ended up on Poloniex, some on Kraken, some on Bittrex and some on Yunbi. Poloniex and Kraken had the decency, professionalism and intelligence to immediately freeze the funds. Bittrex and Yunbi didn’t, see pictures below:

Both dumps occurred at the same time, 10th of August at 8 AM (GMT+2). These are market sells, which means you just dump a certain amount on the market and you don’t care about the price… or you’re trying to completely crash the price. No sane person who would want to maximize his money would ever do that.

You see the price crash further after the market sells due to the uncertainty. Then another post showed up by Jordi, note this is only 2 days after the first one:

I will not spoon feed you what he’s actually saying, I’m sure you’re smart enough to read between the lines. TLDR; We market dumped the illegally obtained ETC to crash/kill ETC but failed and now we want the locked funds back, sorry.

The 14th of August an article was published by Bity which is closely connected to the DAO. How closely? Well:

So it’s safe to assume they are working together to try to keep themselves out of legal trouble, which obviously won’t work.

The article itself is not even worth a read. It’s filled with bullshit and lies, like I said on Twitter: it’s even worse than a David Seaman article and I didn’t think that was possible. Do note that they changed in the article from RHG to WHG to try to play down the involvement of the Ethereum foundation members in all of this. We will get to that later.

Who is/was in the RHG?

Here it gets interesting, although some people at first were happily admitting they were in it, they are new denying any involvement. Obviously they are trying to cover everything up to not be legally responsible for a 15 million dollar theft, market manipulation and probably other legal consequences.

Alex van de Sande:

Alex is part of the Ethereum foundation and from the start has been part of the RHG. He was very vocal on Twitter and Reddit about this.

This of course proves that there are multiple other people from the Ethereum Foundation involved, not just one other person.

Recently, after the hard fork and after the funds became available he started saying he had nothing to do with it anymore.

The most interesting part of his denial post is this:

He still didn’t get the “code is law”, he’s basically saying that Ethereum Classic should be grateful. Right.

Lefteris Karapetsas:

Lefteris is an Ethereum Core developer and was part of the Slockit scam… sorry meant to type “team”.

He also send this DM to someone on Reddit:

Griff Green:

Griff Green was part of the Slockit team, he was the community manager. Yeah the guy that said this in their slack:

He was directly involved with the RHG.

And he also send a DM on Reddit to the same guy:

He was probably just a cheerleader or secretary/personal assistant though, since he has no real skills that could be useful in this situation.

Stephan “The Tool” Tual:

He was part of the original Ethereum team, then left and is now involved with the Slockit team. He posted the following interesting post on Reddit:

This means that the list of people we have confirmed here are just the tip of the iceberg. The others were more careful about publicly speaking out about it.

Everyone was acting as individuals:

This was a phrase that they kept repeating over and over. Was it really?

Why attack Ethereum Classic?

Let me get back on track and talk about Ethereum Classic. We know that the real reason for the hard fork was bailing out Slockit and the Ethereum Foundation members. The hard fork saved people from the Slockit team from huge lawsuits where they would definitely end up in jail for. The hard fork was then also celebrated as a huge victory by the Slockit team members and the Ethereum Foundation.

I’ve talked about the rise of Ethereum Classic in another post, I won’t go into details, but since the fork was really not a success and Poloniex added Ethereum Classic, which in every way is now superior to Ethereum since it didn’t have a bail out, the Ethereum developers got very angry and frustrated.

There is this well known quote from Gandhi:

First they ignore you:

Remember that before the fork the Ethereum Foundation told every exchange that if there would be a split, the 2nd chain would be worthless.

Then they laugh at you:

These were all comments made in the first few hours after Poloniex listed ETC. Since we’re now 3 weeks later and it’s still trading and has more volume as ETH… You can imagine how desperate they are getting.

Then they fight you:

A week or so ago they started with a passive aggressive attack on Ethereum Classic where many Ethereum devs tweeted they would only work on ETH.

Around the same time the Ethereum Classic funds from the DAO were available, you suddenly saw everyone denying they had anything to do with it. This is clear misdirection. Do you believe that the Ethereum foundation and Slockit devs weren’t behind this attack while being involved with the RHG with plenty of proof in the first place?

Let me start by saying that if you read this entire post you know that the “code is law” argument is about the fact that a blockchain should be immutable. Ethereum is no longer a blockchain, it’s an equivalent of a SQL database, even though someone just edited the Wikipedia page to remove the most important part of the definition of a blockchain.

It doesn’t mean that the hacker should be allowed to sell his coins on an exchange… Or that the Ethereum Classic supporters endorse theft. Theft is when you take something that doesn’t belong to you, exactly what the RHG did. It doesn’t allow you to edit the blockchain just because you feel like it.

So after denying everything, suddenly the funds got transferred and they were trying to dump it on the market, trying to crash the ETC market. They came up with those crap posts full of lies which I referenced earlier. I would love to see where the community pressured them into dumping ETC for ETH.

One of the funniest things though was that on a new blog 3 important Ethereum (Foundation) devs suddenly jumped in and started commenting. If that isn’t a red flag…

Do you believe that the benevolent dictator who was in the same chat with RHG members wasn’t aware of what was happening? Does Vitalik really think we’re that naive? I guess he can still deny it, if people try to sue him.

One important line from Jordi’s first post was this one:

This implies that they wanted to support Ethereum projects… Or does it mean that it would end up in the Ethereum Foundation’s investment fund? The latter seems to be the more reasonable assumption.

Then you win:

The last step will come soon. Would you still invest in a SQL database run by thieves and liars? I wouldn’t. I would want my project to be on a (immutable) blockchain.

What should happen with the recovered ETC being held by Poloniex and other exchanges? I see 4 possible scenario’s :

Distribute the ETC to DAO-C holders (people who were holding DAO at the time of the hard fork). This will be extremely difficult and would require a lot of extra work from exchanges. Even though this might be the most fair scenario, I don’t know how likely it is. Burn all the tokens, making ETC more valuable, decreasing the supply. Distribute the ETC tokens to people who still have DAO. Give all the tokens to an Ethereum Classic Foundation for development of the network/PR/projects.

Bity can’t be trusted, as I’ve shown proof before, they are closely linked with the Slockit group who tried to kill the ETC chain. Under no circumstances should they receive the ETC back.

This was the only useful information from the Bity post. I don’t trust them, but if they are serious… Good luck. The price will be upwards of 0.01 BTC if you’re really going to try that.

Bonus chapter: The Inside Job

I’ve mentioned the Reddit user DeviateFish_ in the intro. He has a very interesting github page with a full analysis of the DAO contract called: “The DAO: A contract engineered for failure.” You should read it, but let me just copy the conclusion here:

We have all heard the “conspiracy” theories that the DAO hack was an inside job. Most were without proof, this is circumstantial of course, but highly suspicious and it does raise more questions than it answers. I hope the mystery will get solved at one point.

Once again I urge you to read Jack’s post if you haven’t. It’s well worth the read.

I know it was a long post, but there is so much (mis)information going around. That’s it for me for today.