The head of the leading cryptocurrency exchange Binance Changpeng Zhao summed up the recent attack on the platform, as a result of which hackers managed to steal 7,000 BTC.
As Zhao writes, right after the hacking, the Binance team was not sure what exactly happened. The exchange's security system was the first to respond, after which the withdrawal of funds from the site was immediately stopped.
While things are crystal clear in hindsight, at that moment, we weren’t 100% sure what exactly happened. Was it an actual user action? A glitch in the system? Or maybe a hack? As we were still evaluating the situation at the time, we decided to proceed with caution. I put out a tweet saying the withdrawal servers are in unscheduled maintenance mode, while the team continued to investigate what happened.
He also noted the importance of communication with the community in such situations.
I did not know how the community would react to a one-week withdrawal suspension, but luckily, being transparent paid off and we received tremendous support from our amazing community.
Zhao also reported on the issue of losing money. According to him, immediately after the hacking, he quickly calculated that Binance could easily cover the damage caused by the hackers. In addition, Zhao noted that the amount of stolen funds is comparable to the amount destroyed during one of the quarterly burning tokens a year ago.
So, in September 2017, when the Chinese government issued a letter prohibiting ICO, and “recommended” returning money to investors, the news of this alone caused many tokens to fall below their ICO price.
So we did a quick calculation: if we were to help cover the losses for our users and for those projects, it would cost us roughly $6,000,000 USD. Putting that in perspective, while we only raised $15,000,000 two months prior, we spent a bunch of money and were barely cash flow neutral at the time. We decided to do it anyway. I was in a moving subway when the team called me, and we made that decision together in less than 5 minutes. That was more than 35% of all the cash we had at that time.
At the same time, according to Zhao, such a move eventually brought Binance many users from China and from all over the world, which contributed to the growth of the company.
So, this time, this $40m represented a much smaller % of our cash reserves, plus we had the #SAFU fund that could fully cover it.
He also thanked all members of the community for the help and support provided after the hacking.
Binance suffered hacked attack in the begging of the May, losing 7000 BTC, which is more than $55 000 000 at today's rate (20.05.2019).