PARTNERSHIPS | COMMUNITY | PODCAST | FRIENDS
North Korea Hacked And Heisted Binance
Hacked and heisted // Illustration by Kate Walker
Hackers linked to the North Korean government stole $6.3 billion from Binance’s digital wallets.
The Big Crime: Binance is the world’s largest crypto exchange — it processed about $34 trillion in trades last year, and $167 billion is held in the company’s digital wallets. So, its security controls are supposed to be among the best in the industry. A heist of this magnitude has sent shockwaves throughout the crypto industry… and has already rattled crypto markets.
Behind The Crime: Tom Robinson, co-founder and chief scientist at blockchain intelligence firm Elliptic, called the heist “almost certainly the single largest known theft of any kind.”
Here’s how it went down:
North Korea’s TraderTraitor hacking group broke into Binance through several means, including an employee’s laptop that appears to have been infected with malware.
Once inside, the hackers emptied digital wallets containing $6.3 billion in various tokens. While stablecoin issuers Tether and Circle froze about $3 billion to prevent the hackers from taking it all, they still got away with $3.3 billion.
The hackers then converted most of the stolen tokens into other currencies that are essentially untraceable. North Korea is notorious for using stolen funds to support its missile program.
During the ordeal, Binance halted trading on its platform. (Notably, Binance is headquartered in the UAE and does not directly operate in the US.) Trading was expected to resume by today.
Lasting Damage: Binance founder Changpeng Zhao (a financial felon himself) went on the defensive Friday, saying the company would cover all affected users’ losses in the exact tokens that were stolen, partly through its emergency reserve, the Secure Asset Fund for Users (SAFU). Unfortunately, the $1.23 billion SAFU reserve is held in crypto, and WSJ estimates the fund has already lost $100 million in value, meaning the company will need to pull from other sources to cover the losses.
So far, Binance says it has stockpiled 80% of the various types of tokens that were stolen… so recovery appears to be moving relatively quickly.
The Future: The hack has likely spooked crypto holders around the world, so expect many to move a portion of their coins into offline wallets — something like a crypto piggy bank.
Today’s email was written by David Vendrell.
Edited by Nick Comney. Polled and Copy-edited by Kait Cunniff.
Published by Darline Salazar.
