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How Binance managed the $40m worth Bitcoin theft

How Binance managed the $40m worth Bitcoin theft

May 20, 2019, | AtoZ MarketsChangpeng Zhao the CEO of the global crypto exchange Binance during one of the meetings has revealed to the crypto community how Binance managed the $40m worth Bitcoin theft.

Binance’ hackers were patient and flexible in their techniques

On May 19 Zhao the co-founder and CEO of Binance explained how Binance managed the $40m worth Bitcoin theft. According to Zhao due to network security damage, the hackers were able to obtain API keys, two-factor authentication codes and “potentially other info” of the Binance users.

“CZ” noted in his recent letter, that the hackers “had the patience to wait, and execute well-prepared actions through multiple seemingly independent accounts at the most opportune time”.  

He explained, that as the hackers were patient, they managed to pass Binance existing security checks and get away with 40 mln USD. Zhao expressed his frustration that the company was “not able to block this withdrawal before it was executed.

On May 15 in its blog update, Binance announced that it has completed its system upgrade and would resume all trading activity at 1:00 PM (UTC). The company had resumed withdrawals and deposits from its platform in less than two weeks after its service suspension due to the aforementioned hack.

Binance remains transparent in its communication

After confirming the hacking of its platform, Binance spread information about the incident to the outside world through all communication channels including Telegram, Twitter and Medium.

Being completely transparent in communicating with users, Binance was able to receive “huge support” from them. Later, as an apology for weeks of the service hiatus and to express its gratitude to the community the company decided to give away BNB tokens worth $1.2 million.

According to the Binance’s announcement, all users with a valid trading volume of 1 BTC or more across any trading pairs on Binance during the promotion period could split a pool of 50,000 BNB.

Notable that the crypto community in its turn provided entire support to the crypto exchange. People were defending the exchange through different social media platforms and helping to answer questions related to the incident.

The so-called Binance Angels were”addressing questions” and “reassuring” users on “multiple communities”; analytics were helping with the tracking of the stolen funds; exchanges and wallet services offering to help by blocking “any deposits associated with the hacker addresses”; and “numerous offers for help from law enforcement agencies around the world.”

CZ will reorganize the blockchain?

During his recent AMA (ask me anything) live-stream on Twitter CZ made an interesting announcement.

The stream happened just after the Binance team told Zhao that a Bitcoin Core developer had suggested that it would be technically possible to roll back the single Bitcoin transaction carried out by the hackers by “hugely incentivizing the miners.” CZ mentioned the idea of the blockchain reorganization, which he later, however, called a “taboo topic”.

Later the Binance CEO pointed out a little confusion regarding the blockchain reorganization talk. It sparked a discussion in the Binance’ community.

Longtime bitcoin aficionado Davincij15 stated in his Twitter that such a rollback would not work, and the only outcome might be a splitting of Bitcoin’s chain.

Another user compared the situation to the DAO hack, by saying the following:

Binance team, however, decided against the idea of the ledger reorganization, by saying that “it’s not possible, bitcoin ledger is the most immutable.

Binance being hacked for its own good?

The crypto exchange CEO remained transparent and outspoken regarding the recent issues of the Binance’ security systems.

Changpeng Zhao concluded his speech by saying the following: “Speaking with various team members, and as correctly analyzed by community members, such as Gautam Chhugani, this incident may actually be a good thing for us in the long run. Security is a never-ending practice. There are always more things to do in security, and we have implemented many of them in this last week and will continue to implement more in the future. Given this incident, Binance has actually become far more secure than before, not just in the affected areas, but as a whole.”

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ, nor should they be attributed to AtoZMarkets.

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