The popular Chinese crypto exchange – Binance, suffers a major security breach by losing 7000 bitcoin or $40 million USD from its hot wallet as reported on the official site.
The breach was discovered earlier on May 7, wherein hackers stole API keys, two-factor codes and other information in the attack. Also, Binance, the world’s largest cryptocurrency exchange by volume, said they are yet to identify all impacted accounts, but the theft affected about 2 percent of its total bitcoin holdings.
The news came into light when CEO, Changpeng Zhao tweeted about company’s “unscheduled server maintenance” and hackers managed to transfer the content to a single wallet. Zhao further mentioned that “all of our other wallets are secure and unharmed”.
The hackers had the patience to wait, and execute well-prepared actions through multiple seemingly independent accounts at the most opportune time. The transaction is structured in a way that passed our existing security checks. It was unfortunate that we were not able to block this withdrawal before it was executed.
Soon after the hacker’s action, the withdrawal triggered various internal alarms in the system, and the exchange froze all the withdrawals following the discovery. Until the investigation is complete, the deposits and withdrawals will remain closed but trading will be re-enabled. However, Zhao also cautioned the users that – “the hackers may still control certain user accounts.”
Also, he added that – “we will make sure to completely eradicate any trace of hackers in all our accounts and data and that is a pretty tedious process ” and requested users to change their API keys and two-factor authentication.
Binance uses something called Secure Asset Fund for Users (SAFU fund) to cover loss which will not impact other users. Also, the exchange had designed to absorb 10% of all the trading fees to protect the users in extreme cases. On the same lines Zhao requested that – “In this difficult time, we strive to maintain transparency and would be appreciative of your support. “
On the concluding notes, he mentioned that he would participate in a previously scheduled Twitter “ask-me-anything” session.
Undoubtedly, this incident has effected the crypto market on various levels. Stay tuned with us to receive further updates on this story.