Binance cryptocurrency exchange loses $40 million in hack

Jeannie Matthews
May 10, 2019

Binance, the world's largest cryptocurrency exchange by volume, has confirmed that $40 million in cryptocurrency has been stolen by hackers.

A statement issued by Binance noted that "Hackers were able to obtain a large number of user API keys, 2FA codes, and potentially other info".

Binance said the theft occurred from the company's so-called "hot wallet", which accounts for about 2% of its total bitcoin holdings.

Zhao also posted a link to the electronic history of the theft, which shows the hackers swiped more than 7,074 Bitcoins, worth $41.6 million. Given the nature of the BTC blockchain it's easy to see where each Binance bitcoin is going but it is hard to perform real forensics on the wallets in order to understand who - or what - created them.

However, the debate over Binance's handling of the hack - focusing on an idea being entertained by Zhao to undo the day's transactions - continued. Binance was hacked. Over 7,000 bitcoins were stolen from the hot wallet. However, the Binance Coin or BNB is down by more than 5% which is a genuine movement keeping in mind the hack.

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Unlike some other, more centralized blockchains, Bitcoin is so well-secured that making the entire mining community accept an unorthodox method of returning a small amount of funds would be next to impossible, figures said. The attack managed to circumvent Binance's security checks, but after noticing the odd activity, the exchange blocked all withdrawals. At its peak, in December 2017, bitcoin was worth almost $20,000, igniting a buying frenzy that helped propel the esoteric world of cryptocurrency into the mainstream. "We stopped all withdrawals immediately after that".

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All deposits and withdrawals are suspended for a week, until the company investigates. Binance said it will now conduct a security review of its systems, lasting one week.

Until the industry is able to figure out more secure storage mechanisms such as employing third-party custodians dedicated to securely storing crypto assets, the only recourse available for crypto customers will remain compensation after loss.

The price of bitcoin dropped by as much as 4.2 percent in early Asian trading as news of the back broke, although it later recovered some of its losses.

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