Update: Zhao Changpeng, CEO of Binance, said on Twitter that the exchange had experienced irregularities in trading activity and some accounts may have been compromised by phishing, but “All funds are safe.”
Mr. Zhao has just added on Twitter that they managed to stop unauthorised outflows, saying: “We have localized the irregular trades, they will be reversed. All funds are safe, thanks to the fast alarm.”
Binance, one of the world’s biggest cryptocurrencies exchanges and currently ranked second to OKEx in terms of trading volume, has temporarily suspended withdrawals and trading.
The outage at the trading venue, one of the world’s biggest, comes after a Reddit user published the following complaint: “WTF is happening! Binance just sold all my alts at market rate and I have got just the Bitcoin now. Is it because of account getting hacked or binance bot issue? Have raised a ticket 715903 for this.”
Binance’s woes sparked a mix of criticism, concern and sympathy from users. “Same Here! Buy Order executed VIAcoin at horrendous prices!” posted another user.
According to several posts on Reddit, Twitter and other social channels, someone hacked the trading bot used by majority of people on Binance. The hackers sold the altcoins in comprised accounts and bought another virtual coin, Viacoin (VIA).
Some crypto traders have floated a slightly different theory – that all Binance altcoins were dumped at the same time as a result of a widespread API-related attack. The users who used API keys to trade with bots found their accounts automatically buying the VIA coin.
The basic facts for now are that many accounts got hacked, then the price of VIA price was pumped. It rose 10,000% in a few minutes, then came back down again, using the comprised accounts’ altcoins.
Binance ordered an extensive halt to trading and withdrawals, but denies that it was hacked.
The support staff at Binance said that they are investigating reports of some users having issues with their funds: “Our team is aware and investigating the issue as we speak. Please remain patient and we will provide an update as quickly as possible.”
The use of trading bots, or algorithmic trading, is a technique that uses pre-programmed software to monitors the market and execute trades. These bots have long been working on crypto-exchange markets, with some of them were mainly designed to pump an altcoin or token. Pump and dumps are very common in crypto markets as social media hype is a big influence for newbie traders.
Other exchanges hit by service outages
Cryptocurrency trading platform BitMEX also reported problems with the service on its website, frustrating traders that sought to protect their assets following the Binance hack.
Although it was not immediately clear if the incident was related to Binance’s issues, the operators of BitMEX exchange, which supports highly leveraged trading in virtual coins, said that they are aware of problems with system login. It was caused by the extreme spike in requests backing up the session and rate limit management system.
Several prominent crypto enthusiasts tweeted that all exchanges witnessed a severe sell-off on Wednesday. Others claim it was likely a planned pump and dump scheme and not a freak occurrence. In any case, the mismatch highlights the huge arbitrage opportunities in the cryptocurrency markets, which remain diffused, unregulated, and disjointed.