The great Binance hack

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SANclan
May 10, 2019

Just as BTC was creeping up to the $6,000 levels, something else was creeping up on Binance's hot stash of BTC. Hackers managed to pull off a patient and systematic hack that bypassed Binance's security system to walk away with whooping 7,000 BTC (worth $40M USD).


It started out with an "unscheduled server maintenance" announcement by CZ, reminding the crowd that there's no need to FUD, funds are SAFU.


But keen-eyed crypto twitter user TTS spotted a suspicious large transaction of 7,000 BTC that went out of Binance's hot wallet around the same time that withdrawals/deposits were disabled.


Not long after after the announcement, Binance issued out an official statement about what really happened.

According to the statement,

Hackers were able to obtain a large number of user API keys, 2FA codes, and potentially other info. The hackers used a variety of techniques, including phishing, viruses and other attacks.


Binance will also be undergoing a large scale security review that'll see deposits and withdrawals suspended for at least one week. This essentially leaves room for high volatility in the largest exchange with legit trading volume.
While 7,000 BTC is certainly not a small figure to lose, Binance remains well funded to cover it in full through the SAFU fund.


The Reorg proposal

As the day went on, people started to pour out support to Binance and also offered solutions to foil the hacker's plans. One such proposal by Jeremy Rubin is to have a re-org of the Bitcoin blockchain.


This would involve Binance revealing its private keys for the hacked coins and coordinating with majority of the miners to make changes to the transaction history so that the funds are redirected to the miners instead of the hackers' wallets.


To the surprise of everyone, CZ actually considered the proposed solution. Now, this didn't sit well at all with pretty much the entire crypto community.


You see,


To even entertain that idea is akin to blasphemy. Bitcoin is immutable. Period. And the crowd's consensus is to keep it that way.


In the end, CZ announced that there will be no re-org happening following discussions with several prominent figures that included Jihan Wu.


Even the crowd found this decision not to re-org amusing. It would have failed spectacularly according to Jimmy Song.


Honeybadger doesn't care

As major as the $40M hack news is, it did little to prevent Bitcoin from hitting the $6,000 levels and beyond. Had this news been release in 2018, things would have been much much different. The strength of BTC during these trying times further increases market confidence that we are out of the bear market.

Looks like Bitcoin will continue to do what it does best. Melt everyone's faces off and there's nothing anyone can do about it.

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