Rewind: The Multibillion Hack of Binance Prevented
ExchangesBit News Today2 min read
Rumors circulated in the morning that Binance, the world's second-largest cryptocurrency exchange by 24-hour trading volume, had suffered a hack. Many concerned users took to Reddit to report that Binance had unexpectedly begun selling their altcoins at market rates without their permission or prior notice. At the time, their balances appeared to have been drained and converted to viacoin.
Unauthorized Trades Spark Hack Rumors and Panic
The Binance Support team confirmed in the comments, stating that they were investigating the issue. Binance chief executive Changpeng Zhao tweeted on Wednesday afternoon, "All funds are safe."
Hackers' Elaborate Scheme Thwarted by Automated Controls
As new details emerge, the incident appears to be an elaborate scheme by hackers to manipulate the price of viacoin through an extended phishing campaign that collected Binance users' login credentials.
Binance reported that hackers set up a nearly identical domain to binance.com using similar Unicode characters, and set up a phishing page there. Users who entered their credentials after being directed there were instead taken to the authentic Binance login, leaving a forensic trail of dodgy referring URLs in Binance's server security logs.
Before the incident took place, the perpetrators had established 31 other Binance accounts and deposited Viacoin into them so it could be bought.
When they were ready to execute the scam, the hackers used trading API keys for their stolen account credentials to place automated buy orders, trading Bitcoin to Viacoin, hoping to drive up the price of the altcoin. Most of the evidence points to the hackers losing money on the operation, as they were unable to withdraw BTC.
Binance Confident No Funds Were Lost
Although the massive surge in buy orders rapidly elevated Viacoin's market capitalization, Binance subsequently reversed all of the trades. Binance's internal risk management system identified the abnormal volume of Bitcoin-to-Viacoin orders within two minutes and halted all platform transactions.
In a subsequent inquiry, Binance located the 31 accounts, rolled back every transaction, and confiscated the Viacoin deposits originally transferred by the perpetrators.
Regulatory Concerns, Platform Reassurances
Bitcoin's price dropped below $10,000 shortly after the hack rumors broke, as the SEC made regulatory movements on cryptocurrency and trading platforms.
In the wake of the incident, Binance has pledged $250,000 in BNB tokens to reward persons who supply information leading to the arrest of the hackers. The company's announcement also confirmed that the exchange has set aside an additional $10 million in a cryptocurrency reserve for future bounty programs.
In a blog post, Binance updated its users that its systems have protected its platform and clarified that there was no hack.
