Upset over Binance hacking... Coin exchange hastily strengthened security

(Seoul = Yonhap News) Reporter Lim Hwa-seop = In the wake of the $6.4 billion (approximately KRW 8.5491 trillion) hacking incident that occurred at Binance, the world's largest virtual asset exchange, cryptocurrency-related companies, including other coin exchanges, hastily stepped up to strengthen security.

According to Reuters on the 30th (local time), Coinbase, an American cryptocurrency exchange, adjusted its system for storing virtual asset private keys offline.

Coinbase said the move was "purely precautionary."

If a cryptocurrency exchange stores virtual asset private keys offline, it can reduce the risk of hackers stealing the keys themselves through a remote network.

Kraken, an American coin exchange, said that it is monitoring incidents in the industry to learn lessons that can be applied to its defense system from this incident and has formed a dedicated organization to check for potential vulnerabilities on a daily basis.

Reuters pointed out that as the U.S. Donald Trump administration pursues the incorporation of digital assets into the financial sector, the risk of large-scale hacking is increasing.

Bloomberg News pointed out that, unlike the traditional Wall Street stock exchange, virtual asset exchanges serve as both a trading place and a custodian for customer assets, making them easy targets for attacks.

It is pointed out that wallet operation involves multiple signers, automatic transaction procedures, smart contract rights, external service providers, etc., making it difficult to respond only by protecting private keys.

According to Germany's dpa news agency, Binance is investigating the possibility that a software engineer's laptop was hacked, leading to unauthorized withdrawals.

There has been no evidence yet that private keys have been leaked, and an investigation is being conducted into the possibility that the transaction approval infrastructure may have been tampered with.

Binance is also conducting security checks across the terminal, cloud, key management, and signature system.

According to Reuters, Binance discovered additional intrusions after an initial investigation.

However, the specific intrusion route has not yet been revealed.

According to Binance co-CEO Richard Tung, the attackers used tools and “self-destruct devices” to erase their traces, making investigations difficult.

TRM Labs and Chainalysis determined that this Binance hack was most likely the work of a North Korean-linked hacking organization.

Some point out that a 'social engineering attack' that deceives employees of Binance or related companies to obtain information or access rights may have been used to breach the laptop.

Harry Donally, CEO of Circuit, a virtual asset risk management company, explained that companies are planning to expand employee training in preparation for this.

“For virtual assets to reach their full potential, security issues must be addressed immediately,” Chris Perkins, head of virtual assets at Franklin Templeton, told Reuters.

“This is not only the largest cyber theft in the cryptocurrency industry, but the largest cyber theft in history,” said Aneilyn Flynn, CEO of cybersecurity technology company Failsafe, to Bloomberg. “This incident will undermine trust in cryptocurrency.”

“The industry is working hard to attract institutional investment, but institutional investors will never overlook repeated failures in asset custody and security,” he added.

According to Reuters, the CEO of cryptocurrency exchange OKX argued in a social media

Bloomberg assessed that this incident was a blow to the industry that has been working to secure the trust of institutional investors.

However, Josh Riesman of GSR, a virtual asset company, said that the Binance hack will not lead to significant losses for the cryptocurrency industry as a whole.

He said this incident could serve as an opportunity to promote security improvements at the interface between traditional finance and digital assets.

Binance suspended withdrawals after being attacked on the 29th and announced that the company would bear all losses resulting from the hacking.

Since the hacking incident, the amount of cryptocurrency assets that Binance has succeeded in freezing along with its blockchain partners to date is $3 billion (4 trillion won), which is nearly half of the $6.4 billion in damage.