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Binance Hacked: More than $40.7 Million in Bitcoin is Stolen

Binance is a global crypto exchange and the biggest crypto exchange by daily volume. Although Changpeng Zhao (current CEO) founded the company in China, due to the Chinese government ban on cryptocurrencies, Binance recently moved to Malta.

Binance security breach

On May 7, Binance reported that hackers stole more than 7,000 bitcoins from company’s bitcoin hot wallet. According to the company’s statement, hackers stole API keys, two-factor codes, and other private information in the attack. Moreover, Binance CEO Changpeng Zhao said that the hackers used a variety of techniques such as phishing and viruses. In his statement, Zhao wrote:


The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time. The transaction is structured in a way that passed our existing security checks. It was unfortunate that we were not able to block this withdrawal before it was executed.

Luckily, the security breach impacted only bitcoin’s hot wallet, containing around 2% of Binance’s total bitcoin holdings. Furthermore, Zhao added that all other wallets remain secure and unharmed. After the withdrawal was executed, internal alarms raised suspicion, and the exchange stopped all withdrawals.

Answering the question about issuing the a rollback, Zhao said:

To be honest we can do that probably within the next few days but there are concerns that if we were to do a rollback on the bitcoin network on that scale, it may have some negative consequences in terms of destroying credibility for bitcoin, so our team is still deciding on that and running through the numbers and checking everything. We will try to maintain very high transparency.

According to Binance, this won’t affect users since the company will use its secure asset fund for users (SAFU) to cover losses.

Tracking the stolen coins

Blockchain service company Coinfirm managed to track the stolen coins, and concluded that hackers transfered coins several times to multiple different addresses.

On May 15, the company’s CEO announced that Binance has resumed its trading activities, and from that moment, users can cancel open orders, deposit crypto assets into their account, and buy and sell cryptocurrencies.

Conclusion

Theft and security breaches have been a major problem in the crypto industry, and one of the main obstacles in mass adoption of cryptocurrencies. Recently, a  blockchain intelligence company Ciphertrace published a report stating that in the beginning of 2019, hackers stole more than $356 million from crypto exchanges. Binance is just the latest in the line.


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Tamara Jones