Binance, which is currently one of the largest of all cryptocurrency exchanges (based on daily trade volume), was the victim of a major security breach on Tuesday, according to a statement shared by the Cointelegraph. According to Binance, hackers used several different methods including phishing and viruses to gain access to a large number of 2FA codes and API keys as well as other private information.
According to the cryptocurrency exchange, there was a single transaction which was affected, wherein the hackers were able to steal 7,000 bitcoins holding a value of $40,705,000 as of the time the statement was released. In a letter posted on the Binance website, CEO Changpeng Zhao said that the bitcoins were stolen from its hot wallets, which hold only 2% of the exchange’s overall bitcoin holdings. Zhao made it clear that no other Binance wallets are impacted.
Binance plans to pause all deposits and withdrawals while it executes a complete security system review, which Zhao estimated would take as long as one week. Trading will remain active and traders will retain the ability to make adjusts to their positions. Zhao further added that hackers could still be able to control some user accounts and could use those to influence exchange prices. He stated that the company would be monitoring the platform closely and that with withdrawals disabled, hackers would not have any reason to influence markets.
The company went on to conduct a Twitter AMA so as to answer any questions from those in the cryptocurrency community. Binance will be using its Secure Asset Fund for Users to cover the losses resulting from the incident. The exchange originally created the fund back in July of 2018 as a form of emergency coverage. Binance transfers 10% of all trading fees collected to finance the Secure Asset Fund for Users (SAFU).