In the last few days, Binance is experimenting with massive withdrawals one more time and people started to ask if they should move their funds to another exchange.
In this article. we will explore the notable attacks Binance has faced over the past five years, discussing the motives behind these incidents and the circumstances surrounding them. We will also compare Binance’s approach to security with that of FTX and emphasize the importance of personal custody for token ownership. But first, let’s review some situations in the past that Binance passed before and could surpass them.
Timeline of Binance’s Security Incidents
a) Phishing Attacks (2018)
Binance fell victim to a series of phishing attacks. Hackers sent fraudulent emails and created fake websites imitating Binance’s login page to deceive users into revealing their login credentials. The motive behind these attacks was to gain unauthorized access to user accounts and steal funds. Binance promptly responded by enhancing security measures and educating users about the importance of staying vigilant against phishing attempts.
b) Security Breach (May 2019)
Binance experienced a major security breach in which hackers exploited vulnerabilities and stole approximately 7,000 Bitcoin (BTC) from the exchange’s hot wallet. The hackers used a combination of phishing, viruses, and other attack vectors to execute their plan. Binance responded swiftly by halting all withdrawals and reimbursing affected users’ funds from its SAFU (Secure Asset Fund for Users). The motive behind this attack was financial gain, exploiting weaknesses in Binance’s security infrastructure.
c) Leaked KYC Data (August 2020)
A hacker claimed to a significant amount of Know Your Customer (KYC) data from Binance and threatened to release it publicly. While the hacker demanded a ransom in return, So, Binance categorically denied any breach of its systems and asserted that the leaked data was likely sourced from third-party providers. The motive behind this incident remains unclear, but it highlighted the potential risks associated with centralized exchanges’ reliance on external service providers for KYC procedures.
These causes generated millions of funds in withdrawals. Another example happened in November 2022. Binance suffered massive withdrawals valued at $12 billion over six months, and the company had no problem with this.
In terms of security incident response, Binance has proven to be proactive and committed to protecting its users’ funds. So, it is important to say that Binance didn’t do what FTX did. FTX provided liquidity for its stakeholders creating FTX tokens from thin air. Fortunately for all of us, this was discovered and the devastating domino effect made the crypto winter longer.
The Importance of Personal Custody
While Binance’s security measures have significantly improved on the road, it is crucial to acknowledge that using any centralized exchange comes with inherent risks. The saying “Not your keys, not your tokens” serves as a reminder that custody of digital assets should ultimately lie with the individual users.
To ensure greater security and control over their cryptocurrencies, users should consider moving their assets to non-custodial wallets. By holding their private keys and utilizing wallets that prioritize user control and privacy, individuals can minimize the risk of their funds being compromised in exchange-related security incidents.
Binance’s position as one of the most reliable exchanges in the industry cannot be denied, given its proactive approach to security incidents and commitment to user protection. However, it is essential to understand that relying on your funds only on a centralized platform does not guarantee anything.
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