The security breach on May 8, as confirmed by Binance CEO, Changpeng Zhao (CZ) resulted in the loss of 7,070 BTC (Approximately $41M).
In a company statement they announced that the attackers stole the BTC from hot wallets after acquiring API keys, two-factor codes and other information.
The attackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time.
The attack was reportedly structured in a way that passed the exchanges usual security checks and Binance were unable to block the transaction before it was executed. This $41M security breach follows a string of other high-profile hacks to crypto exchanges in 2019 such as Cryptopia, Coinbene, DragonEx and Bithumb and is to date, the 6th highest security crypto breach in history.
According to sources, the hacked BTC accounted for 2% of the total BTC value within Binance and resulted in a 6.65% loss in daily trade volume. The news spread quickly through the crypto community but has since been received with strong support from notable personalities to support Binance. Coinbase, QKC and Justin Sun were amongst those to offer support, the later personally offered to replace 7,000 BTC to compensate Binance’s loss.
As opposed to similar events in 2018, Bitcoin’s value has been quite resilient in the wake of the breach and once again continues its upward trend to $6,000. CZ has done much to alleviate the concerns around the attack when he devoted his live AMA on Twitter to address the situation.
Binance have stated they are now “focused on rebuilding and recovering” its system. It is likely to take around a week before all withdrawals and deposits could be re-activated. The CEO also stated that Binance is able to cover the loss through its Secure Asset Fund for users (SAFU) which was set up in July 2018 in the form of emergency insurance. Much like the recent Cryptopia attack, users are being advised to reset their 2FA’s and that traders change their API keys to protect themselves and ensure safety.
Since the hack one analyst has estimated it will take the exchange no more than 47 days to re-coup the lost money, basing the data on Q1 2019 of Binance’s financial report. The extent of reputational damage inflicted on Binance has yet to be highlighted but the exchange has witnessed unprecedented growth since its 2017 inception. Binance Coin (BNB), the exchanges native token has been amongst the market’s top performers (currently ranked 7th according to Coin Market Cap).
The Binance Chain is the latest development form the Chinese exchange. CZ has created the software as part of a community-driven development project with developers and contributors from all over the world. Binance DEX is the decentralized exchange feature developed on top of the Binance Chain Blockchain. This move will see BNB migrate from an ERC-20 token to BEP-2 to become the native asset on the Binance chain.
Trust Wallet, Ledger, Enjin, Magnum Wallet, CoolWallet, Coinomi Wallet, Atomic Wallet, ZelCore Wallet, Infinito Wallet, Math Wallet, Ellipal Wallet, Guarda Wallet and Exodus wallets will all be supported on the Binance chain.
As a number of crypto communities have witnessed, Listing and De-listing through the Binance exchange can have a dramatic impact on the assets value. This latest move will inevitably draw more listing ventures to occur on the Binance chain especially if CZ offers incentives for those wishing to grow the new venture. As all are aware, within crypto nothing is certain, but it would be appear that Binance are likely to continue on its current trajectory and crypto hacks will continue to occur. Enhanced security, lessons learnt, and additional vigilance will be required by all parties who operate on the blockchain.