Binance, the world’s largest cryptocurrency exchange, confirmed on Friday that $570 million was stolen in a hack of a blockchain it runs that acts as a bridge for asset transfers between networks. The Binance Smart Chain network attack exposed flaws in decentralised finance, or DeFi, in which transactions are controlled by code.
Software code is never bug free, Binance CEO Changpeng Zhao told CNBC in an interview. He emphasised that no users had lost money as a result of the hack, but he stated that so-called cross-chain bridges were particularly vulnerable to hacks and that the industry needed to improve its ability to learn from them.
In a blog post offering users its sincere apologies, Binance Smart Chain said, they have noticed a series of attacks on targeting weaknesses in cross-chain bridges. They will publicly disclose the post-mortem findings and all lessons learned on how to put more sophisticated security measures in place to plug these holes.
According to a report released in August by the blockchain analytics firm Chainalysis, 13 cross-chain bridge assaults, most of which took place in 2022, resulted in the theft of $2 billion in cryptocurrencies. A hacker attack in March caused the computer game “Axie Infinity,” which uses cryptocurrency, to lose $600 million from a bridge. The Wormhole network was the victim of a $325 million theft in February.
These attacks demonstrate how vulnerable DeFi platforms are when they are controlled by code, and how decentralisation can slow down problem-solving in emergency situations. A group of individuals who possess tokens and have the ability to vote on proposed code modifications are known as validators, and they govern the Binance chain ecosystem.
Decentralized chains are not intended to be stopped, but by getting in touch with community validators one at a time, we were able to stop the situation from getting worse, according to a statement from Binance Smart Chain. “This delayed closing, but we were able to minimize the loss,”.
The Binance Smart Chain community will now vote on the next course of action, including whether to freeze the funds that were stolen and assign a bounty for finding the hackers that may be up to 10% of the value of the assets that were taken.
The creator of the second-most popular cryptocurrency, ether, and the ethereum network, Vitalik Buterin, has been an outspoken opponent of cross-chain bridges, claiming they have “basic security limits.”
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