Fed, OCC check US banks after Binance hack as experts flag security risks

Federal Reserve and Office of the Comptroller of the Currency (OCC) are reaching out to US banks in the wake of a $6.3 billion Binance security breach, as cybersecurity experts express concerns over potential risks to financial institutions. The Federal Reserve and OCC began contacting banks on Monday, according to Reuters, to inquire about "unusual activity" or service disruptions following the hack that occurred last week.

Stefan Muehlbauer, head of US government affairs at CertiK, stated that the inquiries could lead to increased oversight of how banks manage crypto-related risks, including custody, counterparty exposure, and incident response. Banks are currently assessing the impact of the hack and reviewing their systems to determine their ability to withstand similar threats.

One large US bank reportedly contacted Binance within hours of the attack. Binance confirmed that it shared its incident report with all its banking partners and was unaware of any vulnerabilities affecting them. The recent removal of a requirement for state member banks to notify regulators before engaging in crypto activities also precedes this monitoring effort.

The Federal Reserve spokesperson declined to comment on the reported inquiries. The attack began with compromised software installed by an engineer in June, followed by social engineering, stolen credentials, and malicious software to gain access to wallet systems. The hackers then executed unauthorized transfers, resulting in approximately $6.34 billion in digital assets being affected by the attack.

Binance has since bolstered its security measures and is consulting independent cybersecurity experts to review the incident.