Cryptocurrencies Take a Step Back Amid Software Bug Concern

(Bloomberg) -- Resurgent cryptocurrencies were able to shrug off yesterday’s broad financial market sell-off, but they’re not so immune today amid concern that one of the cornerstones of the sector has run into some problems.

There’s a bug in some ERC20 tokens (those based on the Ethereum network). A researcher in a post on Medium alleged "more than a dozen" are susceptible. ERC20 tokens make up about 90 percent of the $53 billion token market, according to data by CoinMarketCap. In response, at least two exchanges, Poloniex and OKEx, temporarily suspended ERC20 token deposits. The service is back up on Poloniex.

This comes a day after some users of MyEtherWallet, an app for storing and sending Ether and Ethereum-based tokens, were attacked and lost funds. The app said in a Reddit post that hackers didn’t get to the app itself but were able to hijack servers. And on Monday, former Commodity Futures Trading Commission Chairman Gary Gensler made the case that Ethereum’s Ether could be considered a security, which would reduce the number of exchanges that can trade the second-largest crypto.

All this may be weighing on the broader market, with Bitcoin slumping back below $9,000, and Ether briefly breaching $600. But it takes more than a 7 percent drop on Bitcoin to phase crypto traders.

“Over the past 24 hours we did see some negative headline news that are potentially impacting the market but we’ve gone up really fast by quite a bit, so corrections are to be expected," said Bart Michalczuk of crypto fund Blocklink Ventures.

To contact the reporter on this story: Camila Russo in New York at crusso15@bloomberg.net.

To contact the editors responsible for this story: Dave Liedtka at dliedtka@bloomberg.net, Jeremy Herron at jherron8@bloomberg.net, Joanna Ossinger

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