Binance Hacked: ‘Centralized Exchanges Are Unreliable’, Warns Xena Exchange CBDO Julie Plavnik

Binance Hacked: 'Centralized Exchanges Are Unreliable', Warns Xena Exchange CBDO Julie Plavnik
Binance Hacked: ‘Centralized Exchanges Are Unreliable’, Warns Xena Exchange CBDO Julie Plavnik

Binance has been hacked. Binance, one of the largest crypto exchanges, has been the victim of a “large-scale security breach.” According to the company, more than 7,000 bitcoin has been stolen, which is the equivalent to $40 million. Despite the currency, hackers were able to take also some user two-factor authentication codes and API tokens. The Chinese-based exchange announced publicly the theft on the evening of May 7, 2019 and it has been described as one of the largest security breaches that the exchange has gone through ever. Xena Exchange CBDO, Julie Plavnik, warns about how “unreliable centralized exchanges are in today’s crypto market.”

Fortunately, the exchange has assured that no user will be affected by the theft as they will make use of the #SAFU fund to cover this incident in full. So no user funds will be affected whatsoever. However, trading in the exchange will be limited at least for a week while the security team review the system and that all data is secured. This interruption will affect deposits and withdrawals, that will remain suspended for that period of time.

Hackers made their way through patiently in an orchestrated attack. “The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time,” the company confirmed in a statement, while “The hackers used a variety of techniques, including phishing, viruses and other attacks. We are still concluding all possible methods used. There may also be additional affected accounts that have not been identified yet.”

The exchange, one of the largest in the world, has been forthcoming and straightforward in publicly announce the hack, which is something the crypto community definitely appreciate. They have also promoted a clear and transparent message while asking for support while they carry on with the investigation.

Nonetheless, comments against the company’s policy and lack of security have risen in the upcoming days. One of those has been Julie Plavnik, CBDO, Xena Exchange, who publicly said: “The attack on Binance is a yet another case showing how unreliable centralized exchanges are. Obviously, even with the presence of impressive financial resources, enabling the exchange to address the security issue properly, and despite the trust of millions of users around the world (as is well known, Binance is one of the leaders in trading volumes), such exchanges are outdated and are more like a giant game of Russian Roulette than a financial ecosystem that stimulates the favorable development of the crypto market.”

For the CEO, the consequence of such events is the slowing down of the development of the crypto financial market, since such attacks increasingly weaken the confidence of participants and delay the entry of institutional entities into the market. Market participants have high expectations related to attacks: namely, that the market will begin to develop strongly and become more orderly and professional. In other words, the institutional entities will lead the market to a higher professional standard.

“There is only one way out,” she continued, “and that is to urgently and drastically change the approach to the storage of client funds. The funds must either be kept in the custody of licensed, highly-reputable third-party custodians or with the client in a personal decentralized account, which, in our opinion, is a more reliable option.”

One way or another, it seems that no financial institution or company is completely safe as cybersecurity has become of the major threats of today’s world. Only in the first three months of 2019 alone, hackers have stolen more than $356 million from exchanges and infrastructure , according to a recent report from blockchain intelligence company Ciphertrace. Nonetheless, it’s less common to see an established exchange like Binance get hacked—and for the attackers to get so much other information along the way. We hope this was only an one-off security breach and that we don’t need to inform again about these scandals.