Binance Users Compromised and Cryptocurrency Prices Drop
On the evening of March 7, 2018 (Moscow time), reports began circulating online about a potential hack of Binance, one of the world’s largest cryptocurrency exchanges. Panicked Reddit users claimed that all altcoins stored in their accounts had been sold at market price and converted into Bitcoin or Ethereum.
Soon after, Binance representatives released an official statement acknowledging the situation and announcing that withdrawals from Binance had been temporarily suspended. An update to the statement clarified that the exchange itself had not been breached, and that most users were unaffected. According to the developers, only those who used API keys for trading bots or third-party services became victims of the unknown attackers.
Binance CEO Changpeng Zhao also took to Twitter to reassure the public, stating that all user funds were safe. He reminded traders to follow basic security rules and promised to provide more details about the incident later. Zhao also noted that the hackers actually lost money during their attempt to compromise users.
Situation Under Control
At present, users on social media and Reddit are reporting that all unauthorized transactions are being reversed and funds are being returned to wallets. This indicates that Binance staff have indeed brought the situation under control.
Users and media outlets have also noticed that, in many cases, the funds from compromised accounts were not just converted to Bitcoin, but were also used to actively purchase the cryptocurrency Viacoin (VIA). As a result of the scammers’ actions, the VIA price surged rapidly, and trading volume jumped from the usual $1–4 million per day to $250 million. It remains unclear how much the attackers could have profited from this pump, but according to Zhao, the hackers ultimately suffered losses.
Market Impact and Regulatory News
Rumors of the Binance hack spread like wildfire across the internet, impacting the prices of major cryptocurrencies and the overall market. For example, Bitcoin’s price dropped by nearly $1,000.
It’s worth noting that cryptocurrency prices were affected not only by the panic over the possible Binance breach, but also by a statement from the U.S. Securities and Exchange Commission (SEC). The SEC announced that all cryptocurrency exchanges and trading platforms dealing in tokens considered securities must officially register with the SEC as brokers, stock exchanges, or alternative trading systems.