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Bitcoin ATM Fraud: Four Canadian Men Declared Wanted

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According to a report published by the CBC. four men have been suspected and declared wanted by the police in connection with the double-spending attacks at Bitcoin ATMs. According to the report, a hundred and twelve transactions took place in just September 2018 out of which around sixty-six (half) of these took place in Calgary and others in Hamilton, Toronto, Winnipeg, Montreal, Ottawa, and Sherwood Park. However, the men that are suspected have unknown identities and the local police are seeking the help of the public in order to identify them.

 

Bitcoin ATM: Double Spend Fraud

Bitcoin ATMs installed in these areas had a zero-confirmation transaction which means that even without a single confirmation, the bitcoin atm allowed the withdrawals which made it possible for the suspects to perform double-spending in these ATMs.

The alleged persons performed a hundred and twelve transaction averaging to around $1800 per transaction in just ten days of time and made more than $200,000 out of it.

 

How does Double-Spending Work?

Double spend is made possible due to tools developed by Peter Todd, a bitcoin core developer who resides in Canada. The tool called replace-by-fee-tools allows the user to ‘unstuck’ and ‘stuck’ transaction by paying extra fees. However, the tools were not developed or endorsed for performing such criminal activity at a bitcoin atm.

According to Peter Todd, the double spend tool creates two transactions in sequence out of which the 1st transaction makes the stated payment to the stated address and the 2nd transaction double spends the same transaction with a transaction which has a greater amount of mining fee, making the payment only to the change address. Also, the user can choose to state that the 1st transaction additional OP-Return, Multisig as well as Blacklisted address outputs. As many bitcoin miners would not accept the transactions that have these kinds of outputs, instead they will accept the 2nd transaction that is a double-spend transaction which indeed assists the user to double spend.

Disclaimer: Coinnounce's views are not necessarily reflected in the articles published, and they are the sole representation of the author's opinions. Article's information should not be taken as investment advice. Risks are involved in cryptocurrency investments and trading. Readers are urged to carry out extensive research before making a decision.

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