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Bitcoin Plunges To $5,700 As Binance Loses 7000 BTC In Hack: Crypto In Shock

Binance Sees “Security Breach”

Binance, a Malta-registered Bitcoin & crypto asset exchange that is one of the most well-respected in the market, has just revealed that it has been slammed by a “large scale security breach”. The platform reports a loss of 7,000 BTC, valued at $42 million at current values.

Early Tuesday, Changpeng “CZ” Zhao, the chief executive of Binance, took to Twitter to reveal that has platform had to undergo “unscheduled server maintenance” that would “impact deposits and withdrawals”. Interestingly, CZ noted that the “funds are #safu”, evidently trying to reassure users that nothing was amiss.

But as we and the rest of the cryptocurrency community have learned through a Binance blog post, funds, namely a large sum of BTC, aren’t entirely SAFU. In the post, it was explained that earlier today, “hackers”, which remain unnamed, were able to obtain a large number of user API keys, two-factor authentication codes,  and “potentially other” tidbits of information, giving them access to users’ accounts on the platform, withdrawal permissions included. It was elaborated:

“The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time. The transaction is structured in a way that passed our existing security checks.”

Binance reports that the malicious group/entity used a serious of techniques to get their hands on this information, including phishing, viruses, potentially the extremely devious SIM swapping technique, and “other [vectors of] attack.” Once hackers managed to get their hands on the aforementioned bits of information, they were able to withdraw 7,000 BTC from Binance’s hot wallet. The company asserts that 7,000 BTC is peanuts:

“The above transaction is the only affected transaction. It impacted our BTC hot wallet only(which contained about 2% of our total BTC holdings). All of our other wallets are secure and unharmed.”

The $42 million that was lost will be reimbursed by Binance’s SAFU fund, ensuring that “no user funds will be affected”.

For now, Binance will conduct a “thorough security review”, and will thus be suspending its deposits and withdrawals for the time being.

Bitcoin Reacts Negatively

Just as seen with the news that Bitfinex and Tether may be financially unwell, Bitcoin began to plunge off this news. Prior to this news, BTC was trading at around $5,925 on platforms like Coinbase, and at $6,250 on Bitfinex specifically. But since this news has broke, the cryptocurrency has plummeted. As of the time of writing this, Bitcoin is down by around 3% since the news broke, finding itself at $5,720 on Coinbase and Bitstamp.

Altcoins, especially Ethereum and Binance Coin, have experienced losses too. Interestingly, however, the subset’s losses have outweighed that of BTC, leading to a slight 0.2% increase in overall Bitcoin dominance.

Title Image Courtesy of Marco Verch On Flickr
About author

Nick has been enamored with cryptocurrencies since foraying into the industry in 2013. He has since gotten involved as a reporter, covering news on a number of blockchain- and crypto-related outlets.
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