3 days ago on May 7, a question that everyone inside the crypto community were afraid to ask, “When the next hack gonna happen?”, got answered. The biggest crypto exchange by trading volume, Binance, got hacked. It was the first time Binance had this kind of incident with estimated loses of 42 million dollars(7000 Bitcoin). In their announcement they stated that:
“The hackers were able to withdraw 7000 BTC in this one transaction: https://www.blockchain.com/btc/tx/e8b406091959700dbffcff30a60b190133721e5c39e89bb5fe23c5a554ab05ea
The above transaction is the only affected transaction. It impacted our BTC hot wallet only (which contained about 2% of our total BTC holdings). All of our other wallets are secure and unharmed.”
No loses for the users
They furthermore ensured the users that their funds won’t be affected and they will use the #SAFU fund to cover the loses. They have suspended deposits and withdrawals for the time being while they keep trading enabled so people can adjust their positions if they wish.
“Binance will use the #SAFU fund to cover this incident in full. No user funds will be affected.”
“Most importantly, deposits and withdrawals will need to REMAIN SUSPENDED during this period of time. We beg for your understanding in this difficult situation.
We will continue to enable trading, so that you may adjust your positions if you wish.”
The Lesson for Binance and all of us
Some may say that “The Lesson” was taken by Binance and the users themselves. Binance, I hope, will enchance their security and the users will understand more deeply the meaning of the saying “Not your keys Not your crypto”.
As long as crypto exchanges remain under a central authority, hacks will happen. That is because centralized exchanges have a single point of failure making them an easy target to steal funds from. Even if a central authority, in this case Binance, takes measures, that doesn’t mean hackers won’t still be interested in finding new ways to land new attacks.
Knowing that attacks can happen anytime in any central authority, an advise I can give you, is to keep the largest % of your portfolio in secure private wallets and always have at least 3 backups of your private keys. The form of backups can vary depending the user preference.
Users can store their assets in paper wallets, hardware cold storage electronic wallets like Ledger Nano S and Trezor Model T or online on encrypted media, where they have to make sure the encryption key is stored offline. To be honest there are many ways to keep our funds safe, all we need is to accept the responsibility of having our wealth stored by us as individuals without the need of a third-party.
You can read the entire announcement posted by Binance regarding the hack, on their website here.