Online invaders hack Binance for over $40 million

Online invaders hack Binance for over $40 million

Horace C. White

Modern Tokyo Times

Hackers hit Binance Crypto Exchange, Steal $40.7 in Bitcoin

The world’s biggest cryptocurrency exchange, Binance, has been reportedly hacked by unknown persons. It announced Tuesday that there has been an incursion on its online platform, which led to the loss of millions of dollars in cryptocurrency. Founded in 2017, Binance has always been in the news for advancing antihacking technologies and enabling crypto-fiat currency conversions. However, this news is likely to paint the centralized cryptocurrency in a bad light as the exchange has worked hard to keep clean records over the years.

Binance Press Statement

In its blog post, the crypto exchange noted that the online invaders made away with 7,000 Bitcoin on May 7th. The Chief Executive of Binance, Changpeng Zhao, disclosed that the “large-scale security breach” of the digital currency exchange culminated in the loss of $41 million (which represents the sum of the stolen coins at today’s exchange rate). This disclosure came after the exchange had earlier announced that it was undergoing maintenance, assuring customers that their funds were intact.

CEO Changpeng tweeted that the invaders obtained sensitive details, such as API keys and 2-factor identification (2FA), which enabled them to hack their hot wallet. Giving more details, the press statement stated that the cyberattackers employed some malicious techniques to bypass its tamperproof security checks. Binance further pointed out that they utilized ransomware and phishing, leading to the successful transfer of digital currencies to untraceable wallets.

The Next Move

The Modern Tokyo Times has gathered that the exchange has yet to identify all the affected net-worth accounts because, according to the press statement, the incursion was carried out on the exchange’s hot wallet. Nonetheless, it has put measures in place to avert a possible bank run. One of such measures is to allow users to continue to trade on the platform. On the other hand, the Malta-based cryptocurrency exchange disclosed that it has resolved to carry out a week-long security check on its platform. In the same statement, Binance opined that the implication of the measure was to suspend all withdrawals from the customers’ wallets. In a fresh move to assuage all the affected customers, it also announced that it would use SAFU (Secure Asset Fund for Users) to pay back all the breached accounts.

Cyberattacks on Cryptocurrency Exchanges

A growing list of cryptocurrency exchanges has come under cyberattacks in the past decade, leading to the loss of billions of dollars in virtual currencies. Indeed, these attacks have become a recurring decimal, discouraging would-be investors from investing in the new asset class. This makes sense given that, more often than not, when these cryptocurrency exchanges experience a security breach, they go under. It would be recalled that in June 2011, the leading Bitcoin exchange platform at the time, Mt. Gox, was hacked, leading to the loss of 750,000 bitcoins ($350 million at the time of the attack). The Japan-based crypto exchange would later file for bankruptcy in 2014. While the majority of bitcoin exchanges rarely survive such attacks, a few of them have, nevertheless, bounced back to business. A typical example is that of Korea-based crypto exchange Coinrail, which lost $40 million worth of altcoins in 2018. Today, the exchange is still in operation. Although cryptocurrency pundits may argue that Binance losing over $41 million to online invaders is peanuts to a $1.3 billion worth cryptocurrency exchange, it would be interesting to see how Binance continues to operate as a business after this cyber hack.

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