The Binance Hack: Here’s What They’re Not Telling You

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Bitcoin plummeted earlier today, as rumors spread that Binance, the world’s largest cryptocurrency exchange, had been hacked.

This isn’t the first time Binance has fallen victim to the online rumor mill. Only weeks ago, John McAfee and Binance’s CEO, Changpeng Zhao, waged a war of words on Twitter after McAfee shared screenshots allegedly showing evidence of a hack.

“I received dozens similar from a variety of sources. I’m not saying there was a hack. I’m merely asking for clarification. If a hack did happen and we are not immediately pursuing it, then the chances of recovery go to zero within 24 hours,” McAfee stated.

The images ended up being photoshopped, and Zhao counter-tweeted by lecturing McAfee on spreading false rumors on social media. He later walked back his comments by releasing the following statement:

“The real helper was Mr. Mcafee, posting an obviously fake image about us being hacked. Everyone pitched in to help defend us. He united the community for us, and rallied such support, during a time when we needed it the most. Sometimes, things that look negative are actually positive.”

Binance laid the controversy to rest and proved the problem was a server issue, not a hack, by transferring funds from Binance’s cold wallet to their hot wallet, and sharing the exchange’s wallet addresses.

Today’s hack appears to be more than rumor, however. Allegations of a hack spread this morning after social media users reported seeing their balances at the exchange drained, sold at market rates and converted to viacoin. Binance claimed their platform wasn’t compromised, and insisted that users were once again crying wolf.

“As of this moment, the only confirmed victims have registered API keys (to use with trading bots or otherwise). There is no evidence of the Binance platform being compromised,” the post said. “Please remain patient and we will provide an update as quickly as possible.”

That claim rings a bit hollow for those who saw their funds mysteriously converted to viacoin, such as Reddit user ohohButternut, who wrote, ”However, there are people on that thread who say they never used API and had their coins sold… One user reports this story.”

As of 10:34am PST, Zhao reported that all Binance funds are safe:

“All funds are safe. There were irregularities in trading activity, automatic alarms triggered. Some accounts may have been compromised by phishing from before. We are still investigating. All funds are safe.”
— CZ (not giving crypto away) (@cz_binance) March 7, 2018

Recently, many cryptocurrency exchanges and trading platforms were hacked. Coincheck experienced a $530 mln hacking attack as reported by Cointelegraph and last month, the largest Nano (RaiBlocks) exchange BitGrail experienced a security breach.

Hours before Coincheck finally admitted to being hacked, members of the crypto community had released evidence showing that hundreds of millions of dollars worth of NEM were moved from Coincheck to external wallets. The faster exchanges respond to these situations, the better their chances are of recovering stolen funds. With hacks of popular exchanges becoming an all-too-common occurrence, many traders have learned the hard way that no exchange is 100% safe.