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The very nature of how digital currency such as Bitcoin is traded and stored makes it a very valuable target for computer hacks. Breaking news on bbc.com details a recent hack on the Binance exchange that netted the thieves $41 million in bitcoin in one fell swoop. The number of actual bitcoins stolen were 7,000.
Binance exchange stores Bitcoin and other cryptocurrencies for investors. Membership in the exchange is required. Following the recent hack, all withdrawals have been suspended. A statement from Binance simply stated, “We beg for your understanding in this difficult situation.”
The exchange also relayed to members that is would be covering the lost cash value with the use of an emergency insurance fund. According to Binance, the primary means for illegally acquiring those funds was a mixture of fraudulent activity. The hackers deployed viruses while also relying on phishing attacks to obtain sensitive security information.
The combined efforts allowed the thieves to gain access to the exchange’s “hot wallet”. This is an online cache of stored bitcoins that remains readily available for various customer transactions. The hot wallet generally contains around two percent of the exchange’s total assets in cryptocurrency. Any other wallets stored with Binance remained secure.
The hacking process was not an overnight scheme. Apparently they “had the patience to wait” while gathering all the necessary information from a number of accounts. Once complete, they were then able to withdraw the 7000 bitcoins. In another statement from Binance, the company added, “It was unfortunate that we were not able to block this withdrawal before it was executed.”
The official response went on the add, “Once executed, the withdrawal triggered various alarms in our system. We stopped all withdrawals immediately after that.” In light of the situation, it is likely that the exchange will remain closed for withdrawals until sometime next week.
Binance’s Chief Executive is Changpeng Zhao. In a recent video chat concerning the theft, he made an attempt to address a multitude of questions surrounding this hack. His general response was:
“I haven’t really slept much for the last 29 hours. To be honest I don’t feel that well…it’s not a great day.”
Most of the time since the theft has been spent securing the exchange from any further hacks.
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