Altcoin News: Binance Has Published a Summary of the Hacker Attack

May 20, 2019, by Marko Vidrih on ALTCOIN MAGAZINE

The CEO of the Binance Cryptocurrency Exchange, which lost 7,000 Bitcoins on May 7 as a result of a hacker attack, Changpeng Zhao has compiled a retrospective of the events.

Although in hindsight, all the circumstances are extremely clear, then we did not have a complete picture of what happened, writes Changpeng Zhao. For example, the company did not know the exact scale of the attack, the attendant risks and allowed the presence of a “mole” in its ranks.

After the withdrawal of funds was stopped, the most pressing issue for users was the time period during which they would again be able to access their assets.

“In the technological sphere, it is impossible to name the exact time of such changes, however, announcing it to the community, our team created a deadline for itself,” adds the CEO Binance. “To restore the system within a week, our team had to do a quarterly amount of work for this week.”

Zhao also describes the events against which he made an angry statement to the community — about the possibility of reorganizing the Bitcoin blockchain in order to eliminate the consequences of the attack:

“ Before the AMA, I had been up all night and I was really feeling the effects. So, I took a 15-minute nap just before the AMA. Upon waking up, my team told me there was an interesting proposal from a Bitcoin Core developer. I read it for a few seconds. It involved something called a “reorg”. While I know it’s technically possible for a rollback in a 51% attack scenario, it never occurred to me that it is also technically possible to change one transaction and keep all other transactions intact, while hugely incentivizing the miners. The discussion was already pretty hot on Twitter, so I mentioned it in the AMA as something that was suggested. Little did I know, it was a taboo topic. Lesson learned.”

Assessing the scale of the attack, Zhao concluded that Binance’s own funds would be enough to compensate for the damage. The amount of stolen assets also turned out to be comparable to the amount withdrawn from circulation by the exchange during one of the quarterly tokens burning a year ago.

In September 2017, when the Chinese authorities imposed a ban on ICO and “recommended” returning money to investors, many projects came under attack, who used Binance in the process of raising funds and could not pay in accordance with the instructions received. According to Zhao, then Binance estimated the amount of losses of users and projects at $6 million and decided to help them, allocating for these purposes 35% of the reserves or all the profits at that time. 2 months before these events, Binance itself raised $15 million.

“So, this time, this $40m represented a much smaller % of our cash reserves, plus we had the #SAFU fund that could fully cover it,” he adds.

In addition to the many exchanges that volunteered to block deposits from the wallets of the attackers, and analytical companies that offered their help, law enforcement agencies from different countries, who had previously contributed to Binance, expressed their willingness to provide support.

In conclusion, Zhao writes that “given this incident, Binance has actually become far more secure than before, not just in the affected areas, but as a whole.”

Author: Marko Vidrih