Temporal: Enterprise Solution for Distributed Data
· ·

Binance faces criticism for considering rollback of the Bitcoin blockchain

Binance faces criticism for considering rollback of the Bitcoin blockchain

The world’s largest cryptocurrency exchange, Binance, has suffered a hack on May 7th where it lost over $40 million in Bitcoin. The exchange’s CEO, Changpeng Zhao, considered pursuing a rollback of the Bitcoin blockchain, which sparked mass outrage on social media and was followed by a drop in Binance’s BNB coin.

Binance Suffers Large Scale Security Breach

Binance, one of the largest and most popular cryptocurrency exchanges in the world, has suffered a major security breach on May 7th, the company revealed in a statement. The exchange said that malicious actors were able to access user API keys, two-factor authentication codes, and “potentially other info.”

Hackers were then able to withdraw more than 7,000 bitcoin, worth roughly $41 million, to a single wallet. Binance said that despite the large amount stolen, the theft only impacted around 2 percent of its total bitcoin holdings and that all of their other wallets remained “secure and unharmed.”

The company apologized to its users and took responsibility for not blocking the malicious withdrawal before it was executed. All losses will be covered by Binance’s secure asset fund for users (SAFU), so no users will be affected by the theft.

However, all deposits and withdrawals will remain suspended until the company’s internal investigation is complete, the statement said, adding that trading will remain open and available to all users.

Calls for Rollback Criticized by the Crypto Community

Changpeng Zhao (CZ), the CEO of the exchange, gave more details about the hack on Periscope. According to TechCrunch, he said that the attack was a very advanced effort executed by “very patient” hackers who waited until they had a number of high net worth accounts.

When asked about issuing a rollback, Zhao said that Binance could do it within the next few days. However, in a separate tweet, he said that after speaking with several high-profile cryptocurrency experts, the company decided not to pursue a rollback.

He then went on to list several pros and cons from the consultations, which included input from Jihan Wu, the co-founder of Bitmain:

The crypto community was quick to react to this, with unprecedented backlash ensuing. Many have pointed out that the conversation about the Bitcoin blockchain rollback should have been left private, as it has caused people to reevaluate both Zhao and the entire Binance project. Others have said that the move has undermined bitcoin and its security, as organizing the miners to do a rollback would cause a mass selloff.

That said, others likened the reorganization to what happened early on in Ethereum’s history following the DAO hack. The subsequent change resulted in the chain’s split into Ethereum and Ethereum Classic, the latter of which chose to retain the unaltered blockchain history. However, at Bitcoin’s current scale the cost of such an operation calls into question its practicality.

As said by Michael Novogratz, billionaire and CEO of cryptocurrency investment firm Galaxy Digital Investments:

Vitalik Buterin, the founder of Ethereum went on to add that even Ethereum did not conduct a rollback because the consequences would be “possibly fatal”:

Zhao’s tweet was also the subject of scrutiny from other high-profile industry experts, most of whom have criticized the consideration of the idea.

Binance Coin | BNB

Updated: Nov 7 at 6:01 am PDT
$26.00
-3.67%

Binance Coin, currently ranked #7 by market cap, is down 3.67% over the past 24 hours. BNB has a market cap of $3.67B with a 24 hour volume of $363.11M.

Chart by CryptoCompare

Binance Coin is down 3.67% over the past 24 hours.

Posted In: , , Crypto Exchanges, Hacks, Mining, Price Watch

The above advertisement is an affiliate link. CryptoSlate will earn a small commission if you sign up.

Like what you see? Get more Binance scandal news in your inbox

Subscribe to CryptoSlate, our daily newsletter containing the top stories and analysis.

Sign up to stay informed
Priyeshu Garg
Author

Priyeshu Garg

Crypto Analyst @ CryptoSlate

Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He holds an engineering degree in computer science engineering and is a passionate economist. He built his first digital marketing startup when he was a teenager, and worked with multiple Fortune 500 companies along with smaller firms. When he is not solving transportation problems at his company (Ola), he can be found writing about the blockchain or roller skating with his friends.

View author profile

Disclaimer: Our writers' opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.