Crypto exchanges tighten security after $6.3B Binance hack

Rival cryptocurrency exchanges moved on Friday, Oct. 30, to strengthen their security after hackers took about $6.3 billion from Binance in the largest crypto theft on record. Coinbase ↘ 10.62% said it had adjusted the systems it uses to store cryptocurrency keys offline "solely out of an abundance of caution," and Kraken said it was studying industry incidents for lessons it could apply to its own defenses, Reuters reported. The breach has also led lawmakers and critics to call for tighter oversight of exchanges just as they become more closely tied to mainstream finance.finance.yahoo.com

Calls for an industry alarm

OKX CEO Star Xu called for coordinated hack detection. "We need a real-time alert system that allows participants to share information immediately when a hack occurs, coordinate a rapid response, and temporarily freeze suspected stolen funds," he wrote on X, according to Reuters. Coinbase also said it was making upgrades to its phone protections against scam calls, and Gemini added new alerts on fund movements, Crypto Times reported, citing the Financial Times. "For crypto to reach its full potential, the security situation must be addressed immediately," said Chris Perkins, head of crypto at Franklin Templeton.cryptotimes.io+1

How the heist unfolded

Most of the money left Binance wallets in about 20 minutes on Thursday, Oct. 29, starting at about 20:05 UTC. TRM Labs blamed the attack on TraderTraitor, a North Korean hacking unit, SecurityWeek reported. Binance said the attack may have started with a compromised engineer's laptop. Co-CEO Richard Teng said the attackers got around normal approval controls to move money out of a "hot" wallet, according to Reuters. Tether froze nearly $1.57 billion linked to the theft and Circle ↘ 9.31% froze $800 million. Bitcoin ↘ 0.38% and Ether Ethereum ↘ 0.18% cannot be frozen. Binance halted withdrawals and promised to cover the losses with company funds.bnd.com+1

Pressure for regulation

Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, said the hack "should be a wake-up call to anyone who thinks the cryptocurrency industry can operate without strong accountability" and criticized what she called a deregulatory Republican agenda. Michael Selig, chairman of the Commodity Futures Trading Commission (CFTC), said the incident "proves our exact point in proposing regulations for crypto markets." He added that his agency wants to give offshore exchanges a way to register, The National reported. The industry group The Digital Chamber urged Congress to give the CFTC authority over exchanges, require customer assets to be kept separate, and set cybersecurity standards, The Block reported. Guests on Al Jazeera's Inside Story discussed whether stronger rules can restore investor trust.aljazeera.com+3

Some executives were more confident. "Our expectation is the industry writ large will actually not suffer material losses," said Josh Riezman of GSR, per Reuters.finance.yahoo.com