Published: Thu, May 09, 2019
Markets | By Erika Turner

BINANCE DISASTER: Hackers steal $42 million

BINANCE DISASTER: Hackers steal $42 million

The cryptocurrency exchange has endured a "large scale" cyber attack which resulted in the theft of 7000 Bitcoins worth around $40.8 million from the platform. "All of our other wallets are secure and unharmed", said CEO Changpeng Zhao.

In a sophisticated attack that involved the coordination of multiple accounts and the unique structuring of transactions, hackers were able to evade the security checks set in place by the exchange. Once executed, the withdrawal triggered various alarms in our system.

"We stopped all withdrawals immediately after that", Zhao said. The SAFU (Secure Asset Fund for Users) was started past year by Binance, when it started putting 10 percent of profits away for such an eventuality. However, the exchange adds the proviso that hackers may still be in control of affected user accounts, stating that these bad actors may "use those to influence prices in the meantime". Indeed, phishing attacks are a popular method used by hackers to obtain valuable information from innocent users which is then used to steal funds.

While this amounts to just two per cent of Binance Bitcoin holdings, Zhao warned that thhere could be other accounts affected by the hack.

Last year, $950m in cryptocurrencies was stolen from cryptocurrency exchanges and infrastructure services such as wallets, up almost 260 percent from the previous year, research from US-based cyber security firm CiptherTrace showed. We do not need funding help.

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The attack was claimed by the Hizbul Ahrar, a splinter group of the Pakistani Taliban, who said they were targeting the police. Senior police official Muhammad Ashfaq told a press conference that the security personnel at the shrine were targeted.

Given that the hackers managed to pull the funds out without triggering Binance's security protocols, some people believe this may have been an inside job.

While Zhao subsequently explained that the idea remained hypothetical following discussions and that Binance would not pursue any form of the reorg, some reactions criticized him for mentioning the topic. "Rolling back 4 days costs more than the hack itself, even before you consider how badly miners would be punished for attempting this". At press time BNB is citing a -6.8% decline in 24 hours.

However, he told Binance users that he and his colleagues were working to secure the exchange and prevent any further hacks.

The fund consists of 10 percent of all trading fees absorbed by the exchange, and was initially launched to protect Binance's users "in extreme cases", according to a previous notice. Let us know your thoughts in the comments!

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