The exchange has launched Binance Research, which will focus on the creation of institutional-grade research reports to increase transparency and improve the quality of information available within the crypto space. Photo: iStock
Binance acquired its Indian competitor WazirX in November 2019. Image: iStock

The largest crypto asset exchange on the planet announced it had suffered a major security breach earlier on Wednesday. Binance, which has a daily volume of more than one billion dollars, announced that hackers had stolen US$40 million of cryptocurrencies from its online wallets.

The official announcement, which came in the early hours of trading in Asia, stated that “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 codes in reference are for users to securely access the website and their digital currency wallets stored there. Binance went on to state that there was only one outbound transaction of 7,000 Bitcoins which had a market value of about $40 million at the time. The breach only affected hot wallets stored on the exchange which accounted for 2% of its BTC holdings.

The exchange continued to state that all transactions have been suspended while the investigation continues and that stolen funds will be reimbursed in full. The security review is expected to take a week during which time users will still be able to trade but cannot deposit or withdraw funds from the exchange.

Charismatic chief executive Changpeng ‘CZ’ Zhao quickly took to Twitter in an attempt to demonstrate full transparency and reassurance that all funds will be replaced from their burgeoning stash of Bitcoin, which has been estimated at about $2 billion.

Other prominent crypto figures linked to Binance were quick to react and show support, with Tron’s Justin Sun offering to deposit the equivalent funds to cover the losses. CZ again took to Twitter to respond.

“Thanks for the support, really appreciate it. But currently no need. We will cover the loss from the #SAFU [safe asset funds] fund, there is enough. We are hurt, but not broke.” 

CZ then hosted a subsequent online debate, that looked at if “rolling back” the Bitcoin blockchain was necessary to nullify the fraudulent transaction.

However, unlike in times gone by, the exchange hack did not cause crypto markets to plummet.

Bitcoin did take a minor dip of about 3%, but has since recovered and is again pushing back up to the $6,000 level, its highest point for six months. Despite the news of the hack, the market sentiment remains clearly bullish.

Economist Alex Krüger commented that “in a bear market this would have easily have caused a deluge,” while Ethereum advocate Anthony Sassano added that “the largest crypto exchange gets hacked and the market shrugs it off within a few hours … I think it’s safe to say that we’re definitely out of the bear market and a new cycle has begun.”

At the time of writing Bitcoin was trading at $5,870, still higher than where it has been for the best part of the past seven days.

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