Crypto exchange Binance loses $100 million to hacker after benefiting from decline of Indian platforms

Crypto exchange Binance loses $100 million to hacker after benefiting from decline of Indian platforms

Indian users on Binance jumped to record levels after a tax on transactions in the country pushed trading volumes on local exchanges by 90 per cent.

FPJ Web DeskUpdated: Saturday, October 08, 2022, 07:23 PM IST
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This is the third hack to hit a crypto firm since June this year. | Photo: Pixabay

Cryptocurrencies are supposed to be secured by encryption since they are registered on online ledgers called blockchains where transactions cannot be duplicated. But apart from volatility as well as crypto coins crashing, fake exchanges as well as other scams also put investors at risk of being duped. Binance gained users in India as downloads in August jumped close to 4.3 lakh, after taxes on cryptocurrencies pushed down trading volumes for Indian exchanges by 90 per cent.

But it turns out that many of the Indians who moved from Indian platforms to the exchange founded by Chinese-Canadian Changpeng Zhao, may have lost investments, after Binance was hit by a hacker. The cybercrook reportedly robbed $100 million from the top crypto trading app, forcing it to shut down transactions temporarily. Although the CEO assured that the situation was under control, Binance locked down vulnerable parts of its system, and its blockchain will now have a new governance mechanism.

Crypto hackers remain a potent threat

This is the third such hack in four months, after an exchange Nomad lost $200 million to a cyberheist in June, while August saw a firm Harmony being robbed of $100 million. Reports from CNBC have also suggested that the damage to Binance might be worse, placing the potential loss at $570 million.

Binance had recently gained a lion’s share of India’s 10 crore crypto enthusiasts, after the government imposed a 1 per cent tax on crypto trading in the country. Indian investors have already lost Rs 1000 crore to crypto scams this year, and it’s still not clear how the Binance hack has hit them.

Scams and hacks dent crypto’s secure image

In 2021, the blockchain universe saw 251 crypto hacks, leading to a robbery of $3.2 billion, and although frequency of such incidents has decreased, the sum being stolen is higher for each heist. Earlier this year the fall of stablecoin Terra also wiped off $40 billion in investor wealth, after which an arrest warrant was issued against its founder Do Kwon in South Korea.

The RBI has also warned investors against the risks of investing in cryptocurrencies which have no underlying, and consistently called for banning it in India.

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