Binance CEO Changpeng “CZ” Zhao is addressing the recent hack of the leading crypto exchange. Trading will be halted for at least a week as the exchange investigates the loss of 7,000 Bitcoin worth about $40 million.
According to Binance, hackers breached its security system on Tuesday at at 17:15:24 (UTC), obtaining a large number of user API keys, 2FA codes and potentially other information.
During an ask-me-anything session, Zhao apologized for the hack and for having to shut down withdrawals. He says the system upgrades that will need to take place this week will stop trading.
“Unfortunately, before we finish that, we will not be able to release withdrawals or accept deposits. We just want to make sure everything is safe. Because we have a very large set of data and system architecture, we estimate it will take about a week.”
Zhao says the attack was sophisticated and intentionally targeted a large number of accounts.
“It’s basically a very advanced persistent hacking effort. They used both external and internal methods to trap a lot of fish and get a lot of user accounts. The hackers are very patient. They don’t move as soon as they have one account. They wait until they have a very large number of accounts. They wait until they get very high-net-worth accounts. Our security efforts were not able to stop that withdrawal which cost us 7,000 BTC which comes to roughly around $40 million about now.”
He encourages users to reset the two-factor authentication security settings on their accounts. The Binance team is also advising users to change their API keys and reset their 2FA.
“We encourage everyone to reset their 2FA. We encourage people to take those security measures as a precaution.”
Zhao highlights the support of the Binance community, citing requests by community members to make donations and encouraging them to donate to the Binance Foundation.
Zhao says he also briefly considered mounting a controversial effort to convince miners that power the Bitcoin network to “rollback” the blockchain and reverse the 7,000 BTC transfer.
“To be honest, we can actually do this probably within the next few days. But there are concerns that if we do a rollback on the bitcoin network at that scale, it may have some negative consequences, in terms of destroying the credibility for Bitcoin.”
According to Zhao, the rollback is no longer being considered. Whether Binance could have pulled off the effort is debatable. The exchange would have needed to gain support from 51% of the miners and nodes that process transactions and fuel the network.