Binance hack left the crypto world in awe, fear and stress

Binance hack left the crypto world in awe, fear and stress

June 22, 2019 Off By Sindy Thompson

The crypto world witnessed something terribly unimaginable last month. Esteemed crypto exchange Binance got hacked in May 2019, leaving the crypto scene worldwide in fear and stress. Binance is almost synonymous to crypto trading. Crypto traders and market experts are now under the apprehension that if such top-notch exchanges like Binance aren’t safe, what would happen to small-scale exchanges.

As per the sources, hackers stole around 40 million USD worth Bitcoin from the exchange in the first quarter of May. The exchange made an announcement the next day reporting about the theft of around 7,000 BTC via one single transaction. The entire plan was orchestrated by a highly skilled team of hackers who deployed varied methods like phishing & viruses. 

The hackers zeroed on the hot wallet of the exchange that stays connected to internet and hence was an easy target for hackers. As per records from Binance, the hackers attained API keys of users, 2FA authentication codes as well as other security information to withdraw 7,000 BTC in just one transaction. They were patient enough to wait for the best possible time and executed the entire plan by tapping into multiple accounts.

Thankfully, Binance stores just 2% of total BTC holdings in hot wallet. Had they kept more of it in the online wallet, the impact would have been really worse. A credible exchange should store maximum possible crypto assets in cold wallet which is not connected to internet and hence are not within the reach of hackers.

“Apart from storing maximum possible crypto assets in cold wallet, a crypto exchange should always be on a monitoring spree. Continuous monitoring would help to keep tab on any abnormal activities on the exchange so that the security team can take steps immediately- before it’s too late. Moreover, an exchange should always be careful of updating its platform and fixing the bugs on time. Hackers take advantage of outdated systems with their advanced malwares”, noted Sydney Ifergan, crypto expert and Advisor of Decoin crypto exchange. Decoin is a decentralized crypto exchange that stores 97% assets in cold wallet. The exchange also takes to constant monitoring and timely upgradation of its platform.

The only solace amid such tragic news is that Binance users would not lose their money due to the heist. The leading exchange has its own emergency fund system called “Secure Asset Fund for Users” that will pay back the users affected by the hack.