Bitcoin and cryptocurrency exchange hacks and security breaches are still a common occurrence but the biggest bitcoin market places are working hard to change this—with mixed success.
The bitcoin price regularly takes a beating due to bitcoin exchanges and cryptocurrency platforms losing its user’s data and, in worst cases, their actual coins.
Now, Binance, the world’s largest cryptocurrency exchange by trading volume which has built a reputation of transparency and reliability, has warned users it’s investigating an alleged leak of verification data.
The alleged security leak could affect up to 60,000 individual users who sent identification information to Binance over the last year, bitcoin and cryptocurrency news website Coindesk reported.
According to Binance, a hacker has claimed to posses 10,000 images of users that hold some similarities to the exchanges know-your-customer (KYC) data, a legal requirement by financial institutions for all customers attempting to trade, withdraw and deposit funds to help prevent money laundering and fraud.
The bitcoin and cryptocurrency exchange, which was founded in Hong Kong and is now based in Malta, says it was blackmailed by the alleged hacker who was demanding 300 bitcoin, worth around $3.5 million at current bitcoin prices.
However, Binance’s widely respected chief executive Changpeng Zhao, often known simply as CZ, played down the “leak,” suggesting it is an attempt to damage Binance and other crypto businesses.
Binance said there are “inconsistencies” when comparing the hacker’s images to the data in its system, and there is “no evidence has been supplied that indicates any KYC images have been obtained from Binance.”
The “leaked” data has been circulated on an anonymous group on messaging app Telegram, with Binance’s CZ adding “by joining or spreading the link of the Telegram group, you are helping malicious hackers (at least giving attention). What we should do as an industry is to fight them. Stay on the positive side. Report the group, then leave.”
Binance has offered a reward of up to 25 bitcoin, worth around $290,000, to anyone with information that leads to the identification of the hacker.
News of the leak has failed to dent the binance coin price, however, which is up some 400% so far this year and around 10% just this week.
Binance coin, launched in July 2017 as an ERC20 token based on the ethereum blockchain after raising over $15 million in an initial coin offering, is a so-called utility token used to pay for services and fees when trading other cryptocurrencies or digital assets on the Binance exchange itself—earning the user discounts over other payment methods.