Bitcoin Rises Despite Recent Binance Hacking
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Cryptocurrency exchange Binance recently lost about 7000 Bitcoins valued at around $40 million to hackers. Despite this serious security breach and theft, Bitcoin price is rallying and reached $7,000 this weekend establishing a fresh new high in 2019.
Throughout the industry Binance has been known for its security and the fact hackers were able to breach one of exchanges hot wallets containing about two percent of the company’s holdings using advanced phishing techniques is concerning. This latest hacking is nothing new.
Over the years a number of exchanges have fallen victim to sophisticated hacking attacks. Kadan Stadelman, CTO of Komodo, a multi-chain platform explains over the years, we’ve seen dozens of exchanges get hacked— in 2018 alone, hackers stole an estimated $1 billion from centralized crypto exchanges.
“It’s honestly not a surprise, given that exchanges hold enormous amounts of users’ wealth in several centralized, extremely valuable wallets. These high-value wallets make the perfect targets for malicious hackers,” says Stadelman.
One similar case in crypto history involved Mt.Gox which collapsed in 2014. This latest heist is not the largest the Bitcoin world has witnessed.
Global Market Taking Notice of Hackings
It seems every few weeks there's another headline about a cryptocurrency exchange being hacked. Daniel Tanner, the CEO of Platon Finance says this latest hacking has not gone unnoticed and the global market is taking notice.
Many believe this is not the first time and will not be the last time that a situation like this has happened. What exactly went wrong within this?
“It is a difficult question because it has been told that this method was different than previous hacking methods that have been used. Even the exchange itself obviously would not say what exactly happened, but what’s important to take away is that it had a bad impact on its reputation, and that’s what remains,” says Tanner.
Every hacking incident is a learning curve and teaches us how systems have been attacked and help us modify the security to avoid similar incidents. Tanner explains with each hack, we continuously upgrade our systems.
Angus Champion de Crespigny, the former cryptocurrency leader at Ernst and Young explains in contrast financial institutions have incredibly stringent controls in place to manage the numerous risks they face, and this comes with costs.
“If exchanges are to manage bearer assets with the maturity of a financial institution, they will need to have a similar approach to processes, risks and controls,” says Crespigny.
Latest Hacking Not a Major Issue
Many crypto players are shrugging off this latest hacking. Rémy Jacobson, the CEO a of RealT, the real estate tokenization and investment platform, commented:“I don’t see the binance hack as a particularly major issue; it is no different than any other market movement we’ve witnessed over the past few months and a recovery has already started”
Jacobson explains that in a way, events like this are no different to the bank robberies of the 1900s when, to safeguard their recovery, the big banks maintained a contingency, just like Binance did on this occasion with its Secure Asset Fund for Users (SAFU).
“Binance has been very reactive to the hack and has been vocal on all channels to reassure the community,” says Jacobson.
According to the Wall Street Journal, over $1.7 billion in cryptocurrency has been stolen over the years and most of the victims have been exchanges centered around Asia. For now Bitcoin and other cryptocurrencies will continue to be a prime target for hackers. As interest in crypto grows many exchanges are finding ways to safeguard from criminals.