$100 Million Stolen From Binance in Hack, Bitcoin Brushes Off the News

$100 Million Stolen From Binance In Hack, Bitcoin Dumps News

Bitcoin, BNB Coins and Binance Talking Points:

  • The October 6 hack led to the theft of 2 million BNB coins from Binance, equivalent to $570 million
  • In the wake of the theft, the industry is trying to respond to weaknesses

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On Thursday, October 6, a hacker stole two million BNB from Binance, the world’s largest cryptocurrency exchange. The initial total value of the BNB hack was $570 million.

Despite the scale of the theft, the broader cryptocurrency market seemed to absorb the news with limited concern. From Bitcoin (BTCUSD) the most popular cryptocurrency, the news coincided with a drop below 20,000, but there was a slight deviation from the normal market movement. For publicly listed Coinbase, investors seemed to have few concerns.

BTCUSD Chart (Daily)

The chart was created in TradingView platform

At the tail end of the exploit, Binance stopped validating BNB, the coin that powers the Binance network. The reason for the hack was a faulty token in the Binance “bridge”.

What is a Blockchain Bridge?

Bridges allow users to send crypto across (non-interoperable) blockchain networks in a timely and cost-effective manner.

However, this efficiency comes at a cost. Bridges, sometimes called Layer 2, lack the security of core blockchain networks such as Bitcoin, Ethereum, and BNB Chain. Human flaws, or omissions, in smart contracts that form bridges, are exploited by hackers.

This happened on the 6th of October on the Binance Network, when a hacker exploited a bridge linking BNB Beacon Chain and BNB Smart Chain.

Although the vulnerability was initially estimated at 570 million, Changpeng Zhai, CEO of Binance, said Friday morning on CNBC that the total damage is now less than 100 million.

According to Chainalysis, more than $2 billion worth of cryptocurrency has been stolen via bridges so far in 2022. This figure represents 69% of the total cryptocurrency stolen in 2022.

What’s next for Binance?

Binance currently has between 26 and 44 nodes. These nodes validate all transactions entering the Binance blockchain. Last night, these nodes voted to upgrade the network to fix the bug.

according to Blog post With the BNB Chain, the network will also use on-chain governance to vote on several proposals, including:

  1. 1- What should be done with stolen money (should it be frozen?).
  2. 2- Whitehat rewards hackers for discovering flaws.
  3. 3. Whether “burning” will be used to cover the remaining hacked funds.

Looking at the graphs

BNB was directly affected by the hack.

BNBUSDT chart with rate of change for 1 day (daily)

image1.png

The chart was created in TradingView platform

However, the broader cryptocurrency market surprisingly held the tail of the Binance exploit.

The chart below shows the DeFi Pulse Indicator, which tracks cryptocurrencies for important DeFi protocols.

Chart for DeFi Pulse to US Dollar (4 hours 0 .)

image2.png

Chart from Coinmarketcap.com

Perhaps Binance’s low correlation with DeFi is that the Ethereum network (which dominates DeFi) is more decentralized in nature than Binance. Ethereum currently has 400,000 validators, which creates greater diversity and security than Binance ~26-44 validators.

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— Written by Mike Martin, Head of Content at tastycrypto


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