Crypto Industry

Cryptocurrency Market Suffers on Binance Hack Fears

John McMahon | March 8, 2018 | 7:00 am
binance
Crypto

Cryptocurrency Market Suffers on Binance Hack Fears

John McMahon | March 8, 2018 | 7:00 am

Bitcoin sunk beneath the key $10,000 mark to a recent low amidst rumor-mongering of a Binance hack that compromised investor accounts.

Nothing Was Hacked

Rumors that apparently began with a Reddit thread questioning whether Binance customers where being hacked spread across the net resulting in an overall drop in the cryptomarket. It may have all started with this comment on Reddit;

“Binance just sold all my alts at market rate and I have got just the Bitcoin now. Is it because of account getting hacked or Binance bot issue? Have raised a ticket 715903 for this.”

To which Binance responded that they were investigating issues that some customers were having with their funds and that the only confirmed victims had registered with API keys (used for trading with bots). They finished by commenting that there was no evidence the platform had been compromised.

Some users continued to dispute the reply saying that they had not used API keys and were missing funds. Giving legs to the rumor so that it quickly spread across social media platforms and began to affect trading across all cryptocurrencies, perhaps further fueled by Binance temporarily disabling withdrawals.

Binance CEO Changpeng Zhao took to Twitter to try and stem the panic tweeting that all funds were safe but some accounts may have been compromised by phishing. He followed that with tweets that showed the accounts that had been compromised with messages restating that the issue had been recognized and fixed.

https://twitter.com/cz_binance/status/971520303812698112

Recent news of major hacks resulting in huge loses may have added to investor reaction. Binance has since published a blog post explaining the incident;

“As withdrawals were already automatically disabled by our risk management system, none of the withdrawals successfully went out. Additionally, the VIA coins deposited by the hackers were also frozen. Not only did the hacker not steal any coins out, their own coins have also been withheld. After a thorough security check by Binance, we resumed withdrawals. Trading functionality was never affected.”

Regardless of Binance’s fast reaction though, the damage was done and the market dropped in reaction to the initial scare in addition to further regulation in the US. Bitcoin hit a recent low of $9,468 and the rest of the altcoins tumbled as well.

SEC Announcement Added to Drop

A more justifiable factor that has compounded the market drop was due to an SEC ruling that mandates cryptocurrency exchanges register or face possible jail time. This came after weeks of subpoenas and evidence gathering as the securities commission still struggles to define what cryptocurrencies are and how to regulate them.

 

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