Binance Hacked Out of $40.7M; Considered Rollback of Bitcoin Network!

Hackers have successfully hacked the world’s largest crypto exchange by volume and managed to steal $40.7 million in cryptocurrency. According to a post by the firm’s CEO, Changpeng Zhao published on the firm’s website, over 7,000 Bitcoin was stolen from the exchange.

The post talks about a “large scale security breach” which was discovered by the company’s security team. The attack was carried out on multiple fronts through phishing, hacking, and stealing API keys, two-factor authentication codes and possibly more. The post also notes a transaction that shows that the hackers were able to withdraw roughly $41 million in Bitcoin.

In an attempt to reassure customers and merchants, Binance stated that the hackers were only able to access the firm’s hot wallet which only stores roughly 2 percent of the firm’s total reserves. However, the statement admits that the firm is still looking into the full damages done to their system by the hack.

The post further explains that hackers were incredibly patient in their operation. Their actions were planned and well executed. Furthermore, the malicious transaction was structured in a way that blindsided Binance security systems. However, once the transaction was executed, it raised alarms and that helped Binance identify the theft.

Prices of nearly all the major cryptocurrencies suffered a blow due to the news of the hack. Bitcoin saw a drop of around $300. All the other prominent cryptocurrencies are also down, somewhere between 1-10 percent.

Binance assured that the Secure Asset Fund for Users will be used to cover the incident and no users will be affected. The Secure Asset Fund for Users (SAFU) is an emergency insurance fund. Binance announced the fund in July 2018, “to protect the future interests of all users.” As per the announcement that came with the launch, Binance allocated 10% of all trading fees received into SAFU to offer protection to the users and their funds in extreme cases. Furthermore, the fund is stored in a separate cold wallet owned by Binance.

Bitcoin’s Credibility Under Threat

Shortly after the announcement, Zhao casually mentioned in a series of tweets that Binance considered pushing for rollback of the Bitcoin blockchain after the hack. While Binance decided against it, what caught the community by surprise was the fact that the rollback was even an option. Implying that immutability of the Bitcoin blockchain was optional if a big enough entity, like Binance, wished it so.

The crypto market is still coming to grips with the news of the hack and the discussions are ongoing regarding the implications of Zhao’s statement about the Bitcoin rollback.

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