What does the million dollar hack of Binance’s BNB tokens teach about the crypto market?

Last week, on Friday, Binance announced an exploit that affects the original cross-chain bridge between BNB Beacon Chain (BEP2) and BNB Smart Chain (BEP20 or BSC), known as “BSC Token Hub.”

In a blog post, Binance said, “a total of 2 million BNB were withdrawn. The exploitation occurred through a sophisticated forging of the low-level proof into one shared library.”

On Friday, BNB tokens traded between over $280 to just over the $286 mark on CoinMarketCap. On the morning of October 7, tokens reached $286.5, and if we take into account the 2 million BNB withdrawn by the hackers – then the loss is about $573 million.

Previously, Binance estimated funds taken by BSC between $100 million – $110 million.

However, on October 10, around 2:39 PM, BNB tokens are trading at $273.70 down 1.26% on CoinMarketCap. The Binance token has taken a hit after the hack as the weekly BNB drop increases by over 4%.

Currently, BNB is the fifth largest cryptocurrency with a market cap of over $44 billion.

The Changpeng Zhao-backed company has taken control of the vast majority of the funds.

In the next move, Binance plans to hold on-chain governance votes to determine the following four actions for the common good of BNB:

– What should be done with the hacked funds, freeze or not?

– Whether to use BNB Auto-Burn to cover the remaining hacked funds or not?

– A Whitehat program for future bugs found, $1 million for each significant bug found.

– A bounty for catching hackers, up to 10% of recovered funds.

“The BSC validation feature for general opinions will be turned on in the next few days via an upgrade of the BNB Beacon Chain,” Binance said.

What does Binance’s hack tell you about the crypto market?

According to Dileep Seinberg, Founder & CEO, MuffinPay, Bill Payment & Utility Crypto, cryptocurrencies are vulnerable to some exploits or compromises. They are not completely immune to such activities. Although they disturb investors’ sentiments in the short term if the token is solid enough fundamentally, then one can hold on in the long run. However, ignoring the comment from the foundation or the extent of the exploitation becomes a concern.

He added that in the long run, such activities bode well for the network, which aims to improve the ecosystem and make the network safe and secure for its users. In the rapidly expanding web3 world, this would be the need of the hour to keep such elements in check.

“The organization said it will do things in detail after the full investigation of the matter, but as of now, the hack has affected the cross-chain bridge and compromised 2 million BNB tokens. The hack occurred between B&B Beacon Chain and BNB Smart Chain Men after having contacted all the validators across 44 time zones, the situation was under control,” Seinberg added.

The organization also plans to introduce a new on-chain governance mechanism for better security in the future.

Also to protect consumer funds in such incidents, the MuffinPay manager believes that there is a need for control and development of a system that is both centralized and decentralized.