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Mike Novogratz warns Binance hack will bring more scrutiny from regulators

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www.chepicap.com 09 May 2019 11:30, UTC
  
Reading time: ~2 m

Galaxy Digital CEO Mike Novogratz has warned that the recent Binance hack could bring much more scrutiny to the crypto space.

Novogratz was reacting to the recent Binance breach that saw hackers steal 7074 Bitcoin, valued around $40 million. The hackers transferred the Bitcoin out of Binance’s hot wallet, containing 2% of Binance’s total Bitcoin holdings. Novogratz scrutinized the exchange, stating“2 percent is a lot when your [SIC] the world’s largest crypto exchange.”

2 percent is a lot when your the worlds largest crypto exchange. No way to spin this as good. Will certainly bring more scrutiny from regulators. https://t.co/uqFH3tStCp

— Michael Novogratz (@novogratz) May 7, 2019

The hackers were able to breach Binance’s system using a variety of viruses and phishing, stealing user API keys, 2FA codes, “and potentially other info,” according to the official release.

Novogratz further criticized Binance CEO Changpeng Zhao for considering reorganizing the Bitcoin network. Novogratz referred to it as “close to heresy” and referencing when Etheum did it, it was about five months old.

Vitalik responded, saying Ethereum did a surgical irregular state change, they never considered rolling back the chain to undo a hack. Such an undertaking “would have been huge and possibly fatal,” Buterin states.

Ethereum did a surgical irregular state change. We never even considered actually rolling back the chain to undo the hack; the collateral damage from that (reverting a day of *everyone's* transactions) would have been huge and possibly fatal.

— Vitalik Non-giver of Ether (@VitalikButerin) May 8, 2019

CZ clarified the situation, saying the original proposal was to construct a transaction that would distribute the funds stolen by the hackers to miners. They never actually considered doing a rollback nor were any of the funds ever going to be returned to Binance had they gone ahead with the decision.

To clarify, the proposal by @JeremyRubin & @_prestwich is to construct a TX that would keep all other tx, and just distribute the hacker coins to miners (about 300 BTC/block prod).

It's not: rollback of any tx, nor is it reverting funds back to Binance.

— CZ Binance (@cz_binance) May 8, 2019

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