In a single withdrawal, hackers siphoned $40 million in bitcoin from one of the largest cryptocurrency exchanges in the world.
Binance said it would suspend all deposits and withdrawals for at least a week while it conducts a security review, though trading will continue. The company said thieves employed phishing and viruses to commandeer the 7,000 bitcoin, and that it was possible hackers might still control some user accounts.
The heist builds on an explosive growth in cryptocurrency crime and investor scams, which jumped more than 400 percent in 2018 and totaled roughly $1.7 billion in losses, according to the cybersecurity firm CipherTrace. More than half that total, or $950 million, was taken from exchanges like Binance and wallets that allow people to store digital currencies.
Binance said the theft affected one of its internet-connected wallets, which contained about 2 percent of its total bitcoin holdings. The company said no user funds will be affected and that insurance will cover the losses in full.
“It was unfortunate that we were not able to block this withdrawal before it was executed,” Binance said in a statement. “Once executed, the withdrawal triggered various alarms in our system. We stopped all withdrawals immediately after that.”
Even cryptocurrency investors unscathed by hacks and scammers are still feeling the pain of a market that has dwindled in value. At its peak, in December 2017, bitcoin was worth nearly $20,000, igniting a buying frenzy that helped propel the esoteric world of cryptocurrency into the mainstream. Several companies hoping to cash in on the hysteria even changed their names to include the word “blockchain” – the technology that drives the virtual currency – sparking widespread amusement and mockery.
By February 2018, bitcoin’s value was cut in half. Then in December, a year after its peak, bitcoin had fallen below $4,000, a drop of more than 80 percent. The rest of the cryptocurrency market soon followed bitcoin’s lead.
The price of bitcoin fell roughly 3 percent Tuesday after Binance’s announcement, but it has since nearly recovered, according to Coinbase, the U.S.-based cryptocurrency exchange.
According to the cryptocurrency tracker CoinMarketCap, the global market capitalization for all digital currencies was $113 billion at the end of January, down more than 86 percent from its all-time high a year earlier.
(c) 2019, The Washington Post · Hamza Shaban