The exchange will cover the losses from its hot wallet via a special fund put aside for the purpose.
Binance, the world’s largest altcoin exchange, has become the latest victim of cryptocurrency hackers. An update on the exchange’s support pages read:
We have discovered a large scale security breach today, May 7, 2019 at 17:15:24 (UTC). Hackers were able to obtain a large number of user API keys, 2FA codes, and potentially other info. The hackers used a variety of techniques, including phishing, viruses and other attacks. We are still concluding all possible methods used. There may also be additional affected accounts that have not been identified yet.
The hackers were able to withdraw 7000 BTC in this one transaction: https://www.blockchain.com/btc/tx/e8b406091959700dbffcff30a60b190133721e5c39e89bb5fe23c5a554ab05ea
So far, this is the only transaction the hackers were able to make – though it is a significant amount of bitcoins, totalling around $40 million. This appears to be around 2% of Binance’s holdings (meaning they have at least 350,000 BTC under management).
Changpeng ‘CZ’ Zhao, Binance’s CEO, said that the losses would not affect customers and would be covered from the ‘Safu’ fund – a reserve established after a previous loss for exactly this eventuality.
Alarms were triggered only after the large withdrawal was made. Binance will now conduct a thorough security audit, disabling deposits and withdrawals for around a week. Trading will continue. However, Binance have warned that the hackers may still control certain accounts, and may use these to manipulate the markets – large holdings can be used to push the price around, for example, playing whale games with smaller investors to increase their profits from this hack.
Surprisingly, however, the hack has not made much of a dent in the price of bitcoin. It is down $160 from its high of $5,970, but that was only to be expected anyway after such a sharp rise. It’s another signal that the bull is back: bad news is shrugged off.
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