Binance & Cryptopia, a Tale of Two Hacks

So far 2019 has been a bumpy ride for ‘Crypto’. The current market is surging after some impressive BTC gains, but we have also witnessed recent security breaches such as those by Binance and Cryptopia.

On May 7th, Binance fell victim to a $41 Million security breach in which 7,070 BTC were stolen. CEO, Changpeng Zhao (CZ) immediately reached out through Twitter and closed trading whilst the firm investigated.

Today, the Binance team said they have finished implementing a major security upgrade and trading is now active. Users are now able to deposit funds, but withdrawals won’t be enabled until final testing is completed.

It is reported that API keys that are connected to third-party trading applications have also been frozen. New keys will have to be created in order to get these API’s up and running again. Binance has also previously recommended that users reset their 2FA codes before they continue trading.

The incident from start to finish has been managed well by Binance and users were immediately reassured that the companies Secure Asset Fund for users (SAFU) would cover the loss. One analyst has estimated it will take the exchange no more than 47 days to re-coup the lost money through profits of trading fees.

In contrast, the long-standing New Zealand exchange, Cryptopia suffered a $16 Million security breach in January 2019. The site had gone into ‘routine maintenance’ but it was later revealed that it had, in fact, been hacked. Specialist Police sections from New Zealand spent some time investigating the matter before the exchange re-opened in April this year.

The exchange had only been re-opened a matter of weeks before it finally closed for good.

 The highly publicised hack of Cryptopia’s exchange in January 2019 had a severe impact on the company’s trade. Despite the efforts of management to reduce cost and return the business to profitability, it was decided the appointment of liquidators was in the best interests of customers, staff and other stakeholders.

As a direct result of the January hack and no clear insurance process in place, the New Zealand firm Grant Thornton has been appointed as financial controllers for the liquidation of Cryptopia, a timeframe for this process has yet to be communicated.

In contrast to 2018, the multiple exchange security breaches have done little to stifle the current momentum. Bitcoin continues to gain market dominance and altcoins are starting to show signs of bullish momentum.

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