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Binance CEO Changpeng Zhao.
- One of the world's largest cryptocurrency exchanges said hackers stole $40 million of bitcoin.
- Taiwan-based Binance discovered the security breach Tuesday and said it will cover all losses from its own funds.
- Watch Bitcoin trade live.
Binance, one of the largest cryptocurrency exchanges, announced a hack of $40 million worth of bitcoin. In a statement posted on the company's site, the exchange "discovered a large scale security breach" on Tuesday.
The exact amount of bitcoin stolen amounted to 7,047.2 coins and the company said it will cover all losses using funds from its reserve accounts. Customer holdings will not be affected.
"The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time," Binance CEO Changpeng Zhao said in a statement on Wednesday. "The transaction is structured in a way that passed our existing security checks."
The company also noted that the hackers were able to obtain sensitive information such as application programming interface keys, which are similar to "tokens" users require to access accounts.
The hackers employed sophisticated techniques involved phishing and viruses and targeted the company's "hot wallet," where bitcoin holdings are connected to the internet, as opposed to "cold wallets," which are stored offline. The company's "hot wallet" holdings are less than 2% of the exchange's holdings.
"This shows how centralized Bitcoin, exchanges and all cryptocurrencies really are and how no cryptocurrency at the moment can currently stop these potential issues from arising," said Richard Dennis, founder of decentralized crypto-network temtum.
Exchange hacks have become an increasing concern for bitcoin holders. The cryptocurrency, which is prized for its reputation as a "secure" asset, has faced a series of crypto-losses, including an incident where the CEO of an exchange died with sole access to the "cold storage" accounts of $137 million in cryptocurrency belonging to about 115,000 customers.
In addition, the New York Attorney General filed a lawsuit in April against Hong Kong-based iFinex, alleging that the exchange had been mixing client funds with its own capital to hide the fact that $850 million went missing in 2018.
Binance announced a suspension of withdrawals until an investigation, expected to take one week, is completed. Customers will still be allowed to adjust their position holdings while the investigation is ongoing.
Bitcoin prices remain volatile. After plunging from its December 2017 peak of $19,891, the cryptocurrency has made a recovery in 2019.
Bitcoin is up 57% from its 2018 year-end price of $3,732.
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