During more than 24 hours, Binance, the world’s biggest cryptocurrency exchange, was down because of a server problem on Feb. 7. On Feb. 9, Binance continued trading after successfully rebooting its server.
Binance hack rumors confuted
John McAfee, a security expert and a famous public figure in the cryptocurrency world, resumed to fuel controversy around Binance and rumors of hacking assaults, showing screenshots that circulated on different social media web-sites.
“I received dozens similar from a variety of sources. I’m not saying there was a hack. I’m merely asking for clarification. If a hack did happen and we are not immediately pursuing it, then the chances of recovery go to zero within 24 hours,” McAfee said.
In reply to McAfee’s statement, which referenced a photoshopped picture of the Binance website, the company’s CEO Changpeng Zhao claimed:
Right after McAfee published several statements on the problem, the Binance team along with its CEO Changpeng Zhao confuted the rumors, saying that Binance was not hacked. Binance went as far as to transfer funds from its cold wallet to hot wallet to show that the exchange wasn’t hacked.
The Binance team also encouraged McAfee not to spread fake information and give evidence that funds on the exchange are secure by publicly showing the cryptocurrency wallet addresses of the exchange.
Zhao also claimed that the exchange did not experience a hack, but a problem with its server and the team focused on recovering its data to authorize trading.
Difference between hack and minor server problems
Not a long time ago, many cryptocurrency exchanges and trading platforms were hacked. Coincheck experienced a $530 mln hacking assault, according to the report by Cointelegraph and yesterday, the biggest Nano (RaiBlocks) exchange BitGrail experienced a security violation.
The distinction between a hacking attack and a minor server problem is that with security gaps, anyone can check the movement of absurdly large amounts of cryptocurrencies from the cryptocurrency exchange’s wallets to external wallets, as seen in the case of Coincheck.
A few hours before the Coincheck team admitted to a hacking assault, a lot of members of the cryptocurrency community provided evidence that hundreds of millions of dollars worth of NEM were removed from the wallet of Coincheck to external wallets.
So, if there is no proofs that large amounts of funds in cryptocurrencies are transferred from the wallets of a cryptocurrency exchange to external wallets, it is irresponsible to suggest the possibility of a hacking assault.
On February 11, Binance CEO Changpeng Zhao published a personal statement on the recent Binance server problem and the actions of McAfee.
“The real helper was Mr. Mcafee, posting an obviously fake image about us being hacked. Everyone pitched in to help defend us. He united the community for us, and rallied such support, during a time when we needed it the most. Sometimes, things that look negative are actually positive.”
Crypto exchanges have similar daily trading volumes as stock markets in regions like S. Korea. Trading platforms process billions of dollars on a daily basis. As such, upon the occurrence of a hacking assault or a security gap, cryptocurrency exchanges often contact the authorities and cooperate with law enforcement to investigate the assault, as Coincheck did last month. Also, given the size of main cryptocurrency exchanges, it is irresponsible to consider the possibility of hacking assaults or security gaps without hard proof.