Bitcoin Price Drops By 10% As Hackers Exploit Binance’s API Keys

The world of cryptocurrency is always full of surprises, and you never know what awaits you when you wake up every morning. Happenings in this sector can be likened to a ride on a bumpy rollercoaster, where one minute you are on top of your game and abruptly hit rock bottom in the next few seconds. Such is the volatility of the cryptocurrency industry.

A few weeks ago, everything seemed calm, and the leading cryptocurrency Bitcoin was showing all signs of gaining significant value and stabilizing after a long period of instability. The price of one Bitcoin moved from $6,150 in February to $10,800.

However, investors woke up to the sad news of Bitcoin prices dropping from $10,740 to $9,690 in just a few minutes on Tuesday. This drop translates to a 10.80% crush. Although it’s hard to establish what is happening in the cryptocurrency sector, one company seems to be facing more trouble more than the investors. Binance, one of the world’s leading cryptocurrency exchanges, reported that it noticed suspicious activities in its transactions which made it halt all withdrawals.

A lot of investors say that they had noticed highly suspicious dealings with Viacoin just before the crash. For instance, there was a substantial increase in the buy requests for Viacoins on the exchange which made the market capitalization to shoot from $64million to approximately $159 million almost instantly.

Cryptocurrency experts say that the drop could be a result of heightened regulations for all exchanges that have started being enforced a few weeks ago. However, other experts are of the opinion that the drop was as a result of Binance being hacked.

Binance initially dismissed the hacking claims, saying that no such action took place on its platform and asked the investors to remain calm since their funds were safe. Now, it is offering a hefty $250,000 reward for any information on the perpetrators.

The company further claimed that what took place was a well-coordinated phishing attack, which was quickly contained by the automatic risk management systems the company put in place. Binance also reported that hackers tried to entice Binance users into using a counterfeit version of the company’s website to enable them to obtain credible login credentials of the investors.

The said hackers, later on, tried to use the few hacked accounts to infiltrate the price of Viacoin and channeled the proceeds into different accounts that they had obtained maliciously and were controlling them.

Binance further stated that it was quick to notice the sudden increase in Viacoin’s buying orders and also noted numerous unauthorized sales.

The company released an official report saying that it was investigating the claims that some of its users were having issues accessing their funds. The post further stated that there was no any concrete evidence that the company’s systems had been compromised in any way.

Binance confirmed that most of its affected users had registered API keys, which mean that either the app or a third party service was compromised. The users of the compromised third party were mainly relying on the API keys to control some of the Binance accounts. Results of the preliminary investigation indicated that a hacker or group of hackers had developed an effective bot that submitted buy orders at the same time.

Some reports allege that this was the second attack on Binance within the same month, suggesting to some that the company’s security protocols are severely lacking. This occurrence also shows how susceptible some of these exchanges are when it comes to web security.

Although Binance managed to stop all the withdrawals, it seems like the action came a little late when the hackers had already gained substantial control over Viacoin on another exchange. There is also a possibility that the hackers managed to sell a significant amount of Viacoins soon after they managed to increase its rate on Binance.

Perhaps this is the reason why you should avoid storing your coins on an exchange but use a hard wallet which is much safer. Alternatively, you can also keep your coins in a wallet that gives you the freedom to control the private keys.


Ethan Warrick
Wealth Authority