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Binance Cryptocurrency Exchange Breached, $40.7 Million Worth Bitcoins Stolen

Binance, one of the largest cryptocurrency exchanges, has announced that hackers have been able to withdraw 7,000 bitcoins a hack of $40 million worth of bitcoin. In a statement posted on the company’s site, the exchange “discovered a large scale security breach” on Tuesday. This is the latest in a long line of thefts in the digital currency space.

“The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time,” Binance CEO Changpeng Zhao said in a statement on Wednesday. “The transaction is structured in a way that passed our existing security checks.”

The hackers used a variety of techniques including phishing and viruses to obtain a large amount of user data, Binance said in a post on its website. There may be additional accounts that have been affected but not yet identified, Binance  said. The largest digital tokens including Bitcoin slid about 3% after the disclosure, then recovered most of the drop.

The company will use its Secure Asset Fund for Users(SAFU), an emergency insurance fund, to cover the incident in full and no user funds will be affected, it said. The transaction was limited to Binances BTC hot wallet, which contains about 2% of the company’s Bitcoin holdings, according to the post. Other wallets are secure and unharmed, the exchange said.The exchange created the fund in July 2018 as a type of emergency insurance. Binance allocates 10% of its total trading fees to finance SAFU.

Binance estimates the review will take a week, during which time all deposits and withdrawals will remain suspended, while trading will continue to be enabled to allow investors to adjust their positions. The hackers may still control some user accounts and may use those to influence prices in the meantime, the exchange said.

The hackers structured the transaction to bypass existing security checks, and Binance was unable to block the withdrawal before it was executed, according to the post. Once the transaction was executed, it triggered alarms on Binances system and all withdrawals were stopped immediately after that, the post said. In a tweet linking to the post, Zhao said it was not the best of days, but we will stay transparent.

(Image Courtesy: www.thebigsmoke.com.au)

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