We Need Regulation and #SAFU for Every Company who Trades Cryptocurrency
We Need Regulation and #SAFU for Every Company who Trades Cryptocurrency
Governments of the world need to wake up, and start to realise that we live in a world of digital signatures, and understand the benefits and risks that this world brings. The days of wet signatures, periodical auditing, and pushing paper are gone, and replaced by faster and more trustworthy methods. Unfortunately there is little in way of proper regulation within financial transactions. Many governments thus just hope that cryptocurrencies will go away, and the whole digital signing thing will just disappear.
The risks of this new world were highlight when on Tuesday, Binance reported that 7,074 bitcoins (around £32 million) had been stolen from their exchange. They found that someone used API keys and two factor authentication code to perform a hack [here]:
After this, the exchange was shutdown:
It is thought that the hack from Binance’s hot wallet, and which has around 2% of all the bitcoins held by them. This means that “possibly” there is no affect on customer wallets. With Bitcoin, there is virtually no chance of stopping the transaction going forward, once it has been picked up by the miners. In the tweet, Binance mention SAFU, and which is a Secure Asset Fund for Users, and this is thought to be used to compensate for any losses from users, and guarantees around 10% of the total amount of assets from the company.
There are rumours that the 2FA bug was reported on 10 Feb 2019, and not responded on:
Many security researchers around the world are now analysing the flow of the hacked coins, such as Coinfirm:
From the core account, Coinfirm found two major branches, and then moved into three other accounts:
They have then identified that the hacked currency is now being split up into smaller wallets:
Conclusions
It is good to see SAFU, but it’s only 10% of the total amount of cryptocurrency. What would have happened if all the cryptocurrency had been hacked — there would have been a 90% short-fall? We need regulation of the industries involved, and they must make sure that they look after their customer’s assets. We must guarantee SAFU, and make sure it is well regulated, so that customers know the risks involved.