Binance cryptocurrency exchange loses $40 million in hack

Daniel Fowler
May 8, 2019

Binance suffered what it's calling a "large scale security breach" yesterday evening.

The hack has only hit Binance's bitcoin hot wallet which contained about 2% of their total BTC holdings and in the light of the hack makes you realize just why exchanges keep only a small percentage of holdings on hot wallets.

Hackers reportedly obtained a large number of API keys, 2FA codes, and other user info that allowed them to withdraw 7,000 BTC. At this point, Binance also doesn't know how many accounts have been affected. Binance said it found evidence of phishing, viruses and possibly other forms of attack.

It added: "The transaction is structured in a way that passed our existing security checks".

Long considered one of the most stable exchanges in the industry, the news that hackers were able to find a loophole in Binance's security sparked dramatic cold feet on the markets - Bitcoin price dropping $200 in minutes. "We stopped all withdrawals immediately after that".

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And he added that he was asking other exchanges to block bitcoins associated with the hacked wallet from being transferred elsewhere, which would render them largely useless. However, the real action happened in 2018 when we saw more than $1.1 billion in cryptocurrency getting hacked on exchanges.

As Bitcoinist reported, Binance appeared surprised yet unfazed by the event, with CEO Changpeng Zhao promising full reimbursements to affected users. However, deposits and withdrawals will remain suspended during the thorough security review that is now being conducted and is expected to last one week. Once executed, the withdrawal triggered various alarms in our system. Zhao says that although the company is able to recover the losses "it does hurt very much".

The post continued: "We must conduct a thorough security review. We beg for your understanding in this hard situation", the exchange wrote.

Binance also warned that "hackers may still control certain user accounts and may use those to influence prices". We will monitor the situation closely. In recent years, a slew of crypto exchanges have been targeted by hackers and cybercriminals.

Since launching in mid-2017 just as bitcoin and cryptocoins in general began their biggest bull run in history, Binance has become one of the world's most popular digital asset trading platforms. 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.

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