Changpeng Zhao (CZ), the founder of the world’s largest cryptocurrency exchange Binance, spoke out about the recent wave of hacks targeting major crypto platforms. In a detailed explanation, CZ outlined major vulnerabilities and offered insights into security practices for both exchanges and users.
CZ noted a disturbing pattern in recent attacks affecting multiple exchanges, including ByBit, Phemex, and WazirX. According to the founder, hackers managed to steal significant amounts of crypto from multi-sig cold storage solutions.
In the case of ByBit, the hackers manipulated the front-end interface to display legitimate transactions while a different transaction was actually being signed. He admitted that he was less familiar with the details of the other incidents, but noted that based on available information, they appeared to have similar attack patterns.
What’s even more concerning, CZ said, is that these exchanges use different multi-sig solution providers, suggesting that the attacks were not limited to a single vulnerability. The hacking group responsible, identified as the infamous Lazarus Group, is known for its advanced cyber capabilities. It remains unclear whether the breaches were caused by compromised signing devices, server-side infiltrations, or both.
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Amid ongoing concerns, CZ reiterated its long-standing security principles. It defended its recommendation to halt all withdrawals following a security breach as a standard precautionary measure. While some criticized its stance, it argued that halting withdrawals allows exchanges to thoroughly investigate the breach, understand the attack vectors, and ensure all systems are secure before resuming operations.
He cited Binance’s experience in 2019 when it was hit with a $40 million hack. Binance stopped withdrawals for a week, which, contrary to fears, resulted in more deposits than withdrawals when services resumed. However, CZ explained that each situation is unique and the decision to halt operations should be made based on the information available.
CZ commended ByBit CEO Ben Zhou for his transparency and composure in handling the security breach. He contrasted Zhou’s approach with what he described as the “less transparent” way issues were handled by other crypto exchange leaders like WazirX and the now-defunct FTX. While he declined to comment on WazirX due to ongoing legal proceedings, he firmly labeled FTX’s collapse as a case of fraud rather than a security failure.
*This is not investment advice.
Continue Reading: Binance Founder CZ Commented on Recent Incidents of Hacking and Fraud
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