Crypto: Spectacular Hack Reinforces Concern About Industry Security

The largest crypto trading platform has been hit by a huge hack that will cause a stir in the industry.

The crypto industry just took a huge blow.

The young industry is going through one of its most difficult years, defined by the slump in cryptocurrency prices. The market has lost more than $2 trillion from its November 2021 all-time high of $3 trillion. It’s currently valued at $986 billion, according to data firm CoinGecko.

The difficulties are reflected particularly in the drop in value of the top two cryptocurrencies since they reached their peaks on Nov. 10, 2021. 

Bitcoin has lost 72% from its all-time high of $69,044.77. Bitcoin at last check was trading around $19,637. Ether, the native token of the ethereum platform, is down 73% from its all-time high of $4,878.26. 

Even the industry’s recent ecosystem-software update known as the Merge did not help. The event was considered historic for the sector because it considerably reduced the energy consumption of the ethereum platform. Ether at last check was trading around $1,335.

A Spectacular Hack

But as if the situation was not already bad, Binance, the largest cryptocurrency exchange platform, and its native token Binance Coin have been hugely hacked.

The Binance Coin hack casts a broad shadow on the crypto industry, which from the start has been plagued by security problems. 

Binance Coin is the fifth cryptocurrency in terms of market value. Its price was around $283 at last check, down 3.2% in the past 24 hours.

According to security companies BlockSec, Paradigm and CertiK, a person hacked around 2 million tokens of Binance Coin. The theft was made in two transactions in which the attacker was able to successfully forge proof messages.

With BNB valued at some $293 in the moments preceding the incident, the total value of tokens stolen from the bridge in the exploit was $586 million, CertiK reported.

“Five hours ago, an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge. During that time, I’ve been working closely with multiple parties to triage and resolve this issue. Here’s how it all went down,” a researcher at Paradigm posted on Twitter on Oct.6.

“1/ The Binance cross-chain bridge has been attacked. The root cause is due to the vulnerability in the message verification,” BlockSec posted on Twitter after Paradigm. 

The blockchain-security company added a list of all the hacked crypto companies since January.

The person managed to get almost $87 million out of the Binance ecosystem but the immediate suspension of the Binance Smart Chain blockchain prevented them from getting the rest of the loot, according to blockchain security firms. 

“Due to the suspension of the chain the attacker has been unable to move the tokens that still remain in their wallet,” CertiK said.

A bridge connects blockchains or different ecosystems.

‘Your Funds Are Not Impacted’

Binance confirmed the hack and said that customer’s funds were not impacted.

“There was an exploit affecting the native cross-chain bridge between BNB Beacon Chain (BEP2) and BNB Smart Chain (BEP20 or BSC), known as ‘BSC Token Hub’,” the platform said in a blog post that you can read here

“A total of 2 million BNB was withdrawn. The exploit was through a sophisticated forging of the low level proof into one common library.”

It added that “the vast majority of the funds remain under control.”

“The current impact estimate is around $100m USD equivalent,” said ChangPeng Zhao, Binance’s CEO. “Your funds are not impacted. The issue will be addressed. Please give the team some time.”

A number of attacks on crypto bridges have occurred this year. In total this year, nearly $2.5 billion has been pillaged from bridges by scammers, who use the bugs and vulnerabilities of these new technologies, according to estimates by TheStreet.

Binance is one of the biggest platforms to be affected by hacking. And even if the damage has been limited by the responsiveness of the Binance ecosystem, the attack suggests that almost all ecosystems are vulnerable.

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