Binance Hacked and Bitfinex Tether’d: On Keeping Assets Safe
Announced today in a post on their website, Binance has confirmed a security breach (or hack) that lead to the withdrawal of 7000 Bitcoin (BTC) (over $40M USD) of users funds. This comes on the heels of the New York Attorney General filing an order relating to a purported $850M loss at the parent company of the Bitfinex exchange in connection to its relationship with Tether (assertions they have denied).
In what has lead to the demise of exchanges in the past, Binance proactively created the SAFU Fund (Secure Asset Fund for Users, but based on an earlier created meme in the Binance community). Binance puts 10% of all trading fees into the fund, which will more than cover any losses to users.
Bitfinex is planning a $1B token offering for the exchange (similar to Binance’s BNB token), which has questionable timing based on the recent court filings, but would more than cover any missing funds.
If you hold any tokens on an exchange, it’s important to understand their safeguards in the case of hacks and missing coins. You also may want to understand what percentage of assets are kept in hot (online and able to be hacked and withdrawn quickly) vs. cold (held offline) wallets.
If this information is not available, that may be an initial red flag, but you must make an assessment of whether your assets are safer in your hands (your own hardware or software wallet) or whether you are more likely to lose your private keys than your exchange is at being hacked.
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