Another major hit in the core of the already shaky crypto currency market with Binance, the world’s largest crypto exchange market was breached by a group of hackers who managed to steal a total of 2 million BNB tokens in the value of around 570 million dollars from the company (Browne, 2022). The company was forced to temporarily shut down its blockchain network to prevent further escalation of the situation (Browne, 2022). An internal investigation revealed a bug impacting the cross-chain bridge, which in simple words a protocol that lets the users of Binance to transfer their crypt currency from one currency to the other (Chainalysis, 2022). The bug assisted the breachers to forge fake transactions by producing more BNB tokens and then sending the money made from the exchange to their crypto wallet on Binance (Browne, 2022). The value of BNB, the Binance crypto currency dropped by more than 3% after the news about the breach (Browne, 2022). In an interview with CNBC, the CEO of Binance, Changpeng Zhao stated that bugs will always exist in digital environments and that the crypto industry is still learning from its weaknesses to improve the security of their operations (Browne, 2022). However, what does that mean for the future of crypto when a single bug can lead to such huge consequences? Can people trust these companies in keeping their money safe and secure from such incidents? Those are questions that need to be addressed and tackled if companies such as Binance are willing to survive and compete against traditional stock exchange markets.
Security breaches in the crypto industry can occur in several ways which are all dangerous to the same extent, nonetheless. From the traditional ways of phishing where users are led to a phishing website to trick them into transferring tokens, to hacking a payment gateway where thieves use social engineering methods to convince the hosting provider that they are the true domain owners (Lin, I. C., & Liao, T. C., 2017). In addition to that, if the hard disk of the token owner fails or malware is installed into the computer where the wallet file is stored then the tokens will be lost forever (Lin, I. C., & Liao, T. C., 2017).
These challenges are threats to the crypto industry for both parties of the equation: The providers of crypto exchange services on the one hand and the customers investing their liquidity through these digital ventures on the other. The security and privacy requirements of these platforms need to be at their optimal level for 100% of the time leaving no space for any malicious entities to misuse the transaction and exchange processes. Otherwise, most individuals including myself will stay hesitant in making any investments in crypto.
Sources:
Browne, R. (2022, October 7). $570 million worth of Binance’s BNB token stolen in another major crypto hack. CNBC. Retrieved October 8, 2022, from https://www.cnbc.com/2022/10/07/more-than-100-million-worth-of-binances-bnb-token-stolen-in-another-major-crypto-hack.html
Chainalysis (2022, August 10). Vulnerabilities in Cross-chain Bridge Protocols Emerge as Top Security Risk. Chainalysis. Retrieved October 8, 2022, from https://blog.chainalysis.com/reports/cross-chain-bridge-hacks-2022/
Lin, I. C., & Liao, T. C. (2017). A survey of blockchain security issues and challenges. Int. J. Netw. Secur., 19(5), 653-659.
Very suspenseful blog! I find it interesting how “unsafe” such big trading companies still are considering the amount the traded capital on it. Somehow, many trading platforms still do not reconize their responsibility. Alongside these occurrences, it is also easy for many trading platforms to scam people with fake products, which is still a happening on a regular basis. Perhaps there needs to be higher regulation as well as more awareness and deeper knowledge from users who trade with crypto…