Binance allegedly suffers catastrophic breach, loses $40M in BTC

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The Binance cryptocurrency exchange has reportedly suffered an attack. Hackers allegedly broke into the exchange and stole around 7,000 Bitcoin Core (BTC), worth approximately $40.5 million, on Tuesday. However, some are questioning if the “hack” was nothing more than some creative footwork on the part of the company.

It didn’t take long for social media to erupt, pointing out that this isn’t the first time Binance has seen almost identical activity. Chico Crypto pointed out on Twitter that the same thing happened almost a year ago, stating, “Doesn’t this ‘hack’ have some uncanny resemblances to the last time it happened?” In that incident, 7,000 BTC were moved out of a Binance hot wallet in July 2018, after which Binance reportedly had to undergo “unplanned maintenance.”

Shortly after Tuesday’s attack or intrusion or creative accounting or whatever it was, Binance’s Changpeng Zhao announced on Twitter that the exchange was going to “perform some unscheduled server maintenance.” He added that deposits and withdrawals would be impacted for a couple of hours, but not trading and that funds would remain safe. However, it appears that funds were never safe.

https://t.co/pnb2Q8hsAw

— Binance (@binance) May 8, 2019

The timing of the breach has also been called into question, with many wondering if the Tether/Bitfinex fiasco and the losses seen there have caused Binance to suffer irreparable harm. There has been some debate over a connection between Binance and Tether’s USDT stablecoin, especially after Zhao tweeted about a large transfer (supposedly hundreds of millions of dollars) of USDT to a cold wallet that apparently never completely arrived. Add to this the fact that Binance continued to support Tether after reports of possible money laundering—even though Zhao was quick to dump Bitcoin SV simply for some comments made by Dr. Craig Wright—and one has to wonder if Zhao and Binance have a hidden agenda.

Zhao’s responses to the unscheduled BTC movement have been a little suspect, as well, and are cause for alarm. At one point, despite saying that trading wouldn’t be affected, he said, “There will be a few system upgrade during this week and there may be a time when we have to halt trading for a little while to make changes in our core systems.”

He also talked about performing a rollback on the BTC network, which could cause even more harm. He explained, “We can do rollback [reorg] on Bitcoin network in the next few days. We can do this, but it may have negative consequences/impact on BTC network and might destroy credibility of the network… We will maintain high transparency and will take the idea of reorg seriously.”

Digital currency is offered on a blockchain; the blockchain is meant to be an immutable, unchangeable and permanent record. If it’s that easy for Zhao to change the record, there are serious concerns raised over the technology’s stability and usability.

This entire incident, starting with the supposed breach and ending with Zhao’s “maintenance” and rollback claims are highly suspect. It’s time for Binance to be put under the regulatory microscope and completely dissected.

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