Crypto Market Tends to Be Rational Over Binance 7000 BTC Hack
The world’s leading crypto exchange Binance has just announced that it has been hacked in a large scale security breach. The platform reports a loss of 7,074 BTC (roughly $41 million at the current values) in its hot wallet, which contains 2% of Binance’s total bitcoin holdings.
Earlier this morning, the exchange’s CEO Changpeng Zhao tweeted that the platform had to “perform some unscheduled server maintenance that will impact deposits and withdrawals for a couple hours”.
Hours later, the platform released an announcement saying they had discovered a large scale security breach at 17:15:24 (UTC) May 7 2019.
“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… The hackers were able to withdraw 7000 BTC in this one transaction https://www.blockchain.com/btc/tx/e8b406091959700dbffcff30a60b190133721e5c39e89bb5fe23c5a554ab05ea”
The exchange will suspend all deposits and withdrawals while it conducts a security review on its systems, which Zhao estimates will take up to one week.
In the concluding part of the statement, Binance reassured users that they will use their SAFU fund to cover the 7,000BTC loss with no user funds affected. Binance created the SAFU fund in July 2018 as a type of emergency insurance and allocates 10% of its total trading fees to finance SAFU.
Binance 7,000 BTC loss is actually not quite a big amount – 52% of Binance’s profit in Q1 2019 (Binance brought in $78 million in profits in Q1 2019) – to lead to a massive panic, but the hack itself is a significant event considering the exchange is the largest and one of the most well-respected crypto exchanges. The news has even made to Bloomberg terminal front page which features reports on central bank activities.
Sometimes when I step back and think, am amazed by how crypto industry news has become mainstream and white glove finance news.
Binance hack has made it to Bloomberg terminal front page, featuring along-side reportings on central bank activities. pic.twitter.com/LsDggluwcr
— Su Zhu (@zhusu) May 8, 2019
As a result of the news, bitcoin dropped from $5,954 to $5,795, a loss of 2.6% in half an hour after the news broke out. But soon the market became stabilized and bitcoin saw its price bounce back above $5,850, as crypto investors realized that the loss of $41 million worth of bitcoin is not a big deal for the exchange and for the broader market.
Regarding the hack, most investors take a more rational approach and show their support for the exchange.
A Chinese investor says the Binance hack would be a good opportunity to test the BTC bull
Binance has 350,000 bitcoin and you think losing 7000 is a big deal! pic.twitter.com/baw6U6WIQQ
— Moon Overlord (@MoonOverlord) May 8, 2019
In bear markets good news doesn't matter
In bull markets bad news doesn't matter (remember China banning crypto in the bull run?)
— Vijay Boyapati (@real_vijay) November 29, 2018
While the breaking news comes at a critical time when bitcoin eyes to break the $6,000 mark. Speculations have arisen over the serial black swan events happening these days after bitcoin show bullish momentum since this April. First crypto exchange Bitfinex was sued by NY which led to the Tether FUD, and now Binance got hacked. There’s also conspiracy theory believing these incidents are such a coincidence, and even claiming Asian whales are manipulating the market.
All pre-planned, and all out of Asia.
Asian whales really do run this market. pic.twitter.com/9tbTsMkDk8
— knlae (@knlae_) May 7, 2019
The Binance hack smells like an inside job. pic.twitter.com/Wv2rxyDSaP
— rae (@cryptorae) May 7, 2019
Chinese investor asks “why always 7000 BTC?!”
(recalling the Syscoin attack on Binance in which the hacker made off with 7000BTC by stealing API keys to execute high-priced sell orders – a Syscoin is sold as high as 96BTC; Binance SAFU fund was thus created in July 2018 to cope with such emergency)