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Here’s Why Good Days of Binance May End Soon

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VOC, Voice of Crypto, BNB

Created in 2017, Binance rose through the ranks and quickly became the world’s largest exchange. Over time, Binance has enjoyed fairly good business conditions, with its native blockchain (the Binance Smart Chain) being one of the most successful blockchains.

However, the world of blockchains and DeFi is rife with exploits that happen almost every month and have cost several protocols millions and even billions of dollars over the years.

The latest to suffer from one of these exploits is Binance, with its “Binance Smart Chain (BSC)” suffering a massive attack. This attack came in through the Binance bridge and cleared off 2 million BNB (the BSC’s native cryptocurrency), worth about $500 million at the time of writing.

According to its founder and CEO, the chain is “temporarily paused” to enable its engineers to trace the faults and rectify further vulnerabilities.

History of DeFi Hacks

Blockchain Bridges constitute a significant weakness in several DeFi, blockchain, and crypto hacks. 9/10 out of all the security exploits that have hit these architectures have been through bridges.

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In 2022 alone, an estimated 2 billion dollars have been stolen through blockchain bridges alone, as reported by Bloomberg.

As their name implies, Blockchain Bridges work just like the bridges we know in the real world. Put simply, they serve as connections between two blockchain ecosystems.

However, different blockchain ecosystems have different architectures and protocols and cannot communicate natively. Making it easy for hackers to come in, exploit these differences, and make away with a lot of money.

According to crypto researcher samczun who provided a detailed thread about the hack, the hack happened relatively simply.

The BSC Token Hub Bridge was exploited so that it received orders to send the hacker (or hackers) one million BNB twice over two separate transactions.

Receipts showing that an attacker indeed stole $500 million worth of BNB, Binance

Receipts showing that an attacker indeed stole $500 million worth of BNB | Source: @samczun on Twitter

According to the Binance management team, these tokens transferred to the attackers didn’t belong to any users of the BSC chain. These tokens didn’t even exist before the hack.

This either means that Binance was running the biggest giveaway in the history of crypto, or the attackers found a massive vulnerability in the network and simply “created” the money they stole.

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The price of BNB has reacted to this attack and has fallen by 4% in the last 24 hours at the time of writing.

On-chain data showing the price of BNB’s reaction to the hack 

On-chain data showing the price of BNB’s reaction to the hack | Source: CoinMarketCap

The Aftermath 

After stealing such a huge amount of money, the attackers promptly headed to the Venus Protocol (a Defi money market protocol on the BNB chain) and deposited a jaw-dropping $200 million.

Transaction receipt showing deposit of $200 million on the Venus Protocol 

Transaction receipt showing deposit of $200 million on the Venus Protocol | Source: @samczun on Twitter

Since the attack, the BSC representatives have explained that they made arrangements with their validators to temporarily suspend the Binance Smart Chain. Many critics have complained about the idea of “decentralization” and Binance’s decision to suspend a whole network.

However, Binance’s CEO, Changpeng Zhao, has assured Binance’s customers that their funds are safe and there is nothing to worry about.

 

 

Disclaimer: The author’s comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR  (do your own research)

 

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Jim Haastrup is a freelance blockchain and metaverse writer. He helps founders, investors, startups, crypto, and blockchain enthusiasts connect with their audience and win investment through the written word.

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