Binance Hack: What Really Happened? [Updated]
Many news reports spread about the largest cryptocurrency exchange in the world losing $100 million to hackers. Also, they suggested the amount could have reached $570 million.
Binance corrected the estimate. Changpeng Zhao tweeted that the hacker only took $100 million, and the crypto exchange froze $7 million. Then, he reassured investors that “The issue is contained now. Your funds are safe.”
However, the BNB Chain website recently issued a clarification. It reiterated that the so-called Binance hack did not happen.
Binance hack: What the ‘hack’ happened?
Photo Credit: cointelegraph.com
The incident was a result of a weakness in a cross-chain bridge. In turn, the supply of Binance coins, or BNB, produced a surplus of 2 million BNB tokens.
Also, it asked validators to suspend transactions temporarily. These are Binance investors who vote on the network’s actions. Zhao thanked the validators for their swift response.
A tweet read, “We are humbled by the speed and collaboration from the community to freeze funds.” Thus, the crypto exchange continues its work with validators worldwide to track and freeze these assets.
On October 11, 2022, the price of BNB tokens was $270.89. Its price slump is mainly due to the crypto market’s overall downturn.
Learning from the Binance hack
An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe. We apologize for the inconvenience and will provide further updates accordingly.
— CZ 🔶 Binance (@cz_binance) October 6, 2022
The recent cyberattack highlights the importance of doing your own research or DYOR. You must keep track of the latest updates to secure your portfolio.
The so-called Binance hack shows the resiliency and flexibility of blockchain networks. Blockchains are decentralized computer networks.
It spreads its operations on numerous computers so that cyberattacks cannot cripple the entire network easily. More importantly, a group of trusted validators helps manage the system.
Thanks to their work, the Binance Chain continues its regular operations. Also, investors should keep in mind that technology is not foolproof.
For example, the Terra (LUNA) blockchain was a lucrative network. Unfortunately, faults with its algorithms allowed the value of its stablecoin to plummet significantly.
Remember that many online banks do not use cryptocurrency networks but still experience issues. For example, the Chime neobank experienced outages that closed 12 million user accounts.
Traditional banks are not free from problems either. For instance, some state banks in China froze accounts months ago. In other words, they prevented clients from withdrawing funds.
You must perform adequate research to find the best cryptocurrencies for your portfolio. It would be best to choose long-standing options like Binance.
Conclusion
Talks of a “Binance hack” turned viral online, suggesting that it lost millions of dollars to a cyberattack. Later, Binance clarified the issue.
The incident occurred due to an exploit of its cross-chain bridge. As a result, it created an excess of two million BNB tokens. Fortunately, its validators are tracking and freezing these funds.
You can learn more about bitcoin and other cryptocurrencies by reading more Inquirer articles. Note that this article does not provide investment advice.
