Coinbase missed revenue estimates as Binance hack rattles crypto markets

Hackers have stolen a staggering $6.3 billion worth of digital assets from Binance, a leading cryptocurrency exchange. This unprecedented cyberattack dwarfs the previous largest theft by more than four times. Blockchain intelligence firm TRM Labs Inc. suspects a North Korean state-backed hacking group, dubbed TraderTraitor, orchestrated both incidents.

Stablecoins issued by Circle, Ripple and Tether constituted roughly 40% of the stolen funds. Binance has allocated over $6.34 billion to compensate affected users. Despite freezing most of the funds, the hackers managed to evade detection. Binance's wallets were compromised, including one crucial to processing Ethereum transactions.

The breach was traced back to an exploit of Ethereum's EIP-7702 feature, which allows a smart contract to temporarily control a wallet. This authorization typically requires an encrypted message from the wallet's operator. However, the hackers breached this through a malicious smart contract, which is currently unknown. Binance discovered the intrusion late Thursday when the hackers moved the stolen funds.

An internal probe revealed that a devops engineer's laptop was compromised. The company also uncovered additional breach points. Binance suspects the hackers had practiced the attack for at least 36 hours prior. They tested their code on multiple wallets and utilized a self-destruct mechanism to hinder investigation. Despite this, they bypassed Binance's approval workflows for crypto movements.

The exchange immediately suspended deposits and withdrawals and later restored deposits but left withdrawal processing offline. Binance intends to reactivate this feature on Monday.