Binance, one of the world’s largest cryptocurrency exchanges, revealed on Tuesday that hackers managed to steal over 7,000 bitcoins, worth more than $41 million.
According to Changpeng Zhao, founder and CEO of Binance, the hackers took the bitcoins from a hot wallet that stored roughly 2 percent of the company’s total holdings. Zhao said no other wallets were impacted and assured customers that its Secure Asset Fund for Users (SAFU) emergency insurance fund will cover the losses.
The hack, which Binance described as “a large scale security breach,” was discovered on May 7. The hackers are said to have obtained a large number of user API keys and two-factor authentication codes, and leveraged phishing, malware and other techniques to carry out the attack.
“The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time. The transaction is structured in a way that passed our existing security checks,” Zhao explained. “It was unfortunate that we were not able to block this withdrawal before it was executed. Once executed, the withdrawal triggered various alarms in our system. We stopped all withdrawals immediately after that.”
Binance plans on conducting a thorough security review that is expected to take roughly one week. The company has promised to keep customers updated on the progress, but deposits and withdrawals will remain suspended during the process.
“We will continue to enable trading, so that you may adjust your positions if you wish. Please also understand that the hackers may still control certain user accounts and may use those to influence prices in the meantime. We will monitor the situation closely. But we believe with withdrawals disabled, there isn’t much incentive for hackers to influence markets,” Zhao said.
Zhao said on Twitter that Coinbase and other exchanges will block deposits from the bitcoin addresses to which the hackers transferred the funds.
Many cryptocurrency exchanges were hacked in the past years and attackers in many cases managed to steal millions and even tens of millions of dollars worth of cryptocurrency. The list of impacted exchanges includes Coinrail, Zaif, Coincheck, Bithumb, Bter, Bitfinex, and CAVIRTEX.