Binance Theft – the well-known exchange, Binance, that holds Bitcoin as well as other cryptocurrencies for their members has reported that 41 million worth of Bitcoin has been stolen from their database all at once. Due to this unfortunate event, the exchange has suspended any withdrawals until probably next week; and has asked their clients understanding through this difficult time. This article will explain more about this security breach. If you haven’t seen our Binance review, do check it out here, to see what we are working with.
Binance Theft – $41 million!
One of the largest crypto exchanges worldwide has said that this is their biggest security breach yet. Binance posted a statement about the theft on their site saying how they “discovered a massive security breach” on Tuesday. The stolen amount of Bitcoin was exactly 7.042 coins. Although this is only about 2 per cent of the amount of Bitcoin they hold; Binance has said that they will cover the whole incident leaving no user funds affected. Therefore, the Secure Asset Fund for Users (SAFU) that was set up last year will take care of all lost funds.
Skilled and very patient hackers
Binance said that the theft took place in one single transaction from their ‘hot wallet’. The exchange also mentioned in a statement; that they have identified the type of the hack used. These hackers were very patient to wait for the most suitable time to carry out the hack via several accounts that were all independent. The hackers made use of a lot of techniques over time, including viruses and phishing among others.
According to Binance during this unpleasant theft, the hackers managed to obtain a considerable number of 2FA codes, API keys and possibly more user information; which they may use to influence the price of Bitcoin. Therefore, other accounts may have been affected or are still to be affected; however, those have not been identified just yet. Furthermore, the CEO of Binance Zhao Changpeng said that there would be a thorough security review which will take about a week; but until then, deposits and withdrawals will remain suspended.
Why does Bitcoin keep getting hacked?
This Binance theft came at a time when Bitcoin experienced a recent rally, with a price that is about 9% more over the last week. Therefore, it will not be surprising if the hack affects the price of Bitcoin as investors now question why Bitcoin keeps getting hacked if it is supposedly so safe. An example of previous events includes; when Mt. Gox, collapsed in 2014 following the loss of $460 million, apparently to hackers. Have a look at Bitcoin scams and how to avoid them here.
The CEO noted that although they considered responding to the theft with the supposed Blockchain re-org approach (incentivising miners into a consensus that will wield 51% of the exchanges hashing power to repair transactions after the loss); they decided not to take that route as it may have some major disadvantages. This approach might destroy the credibility of Bitcoin. Apart from the low chances of this approach being successful, it is just not the best option as it could result in a split in the Bitcoin community and network.