Eric Schiffer, chairman of Patriarch and Reputation Management Consultants, warned that the $6.3 billion Binance hack could signal a wave of cyber attacks.
The $6.3 billion cryptocurrency hack on Binance is a warning of potentially devastating cyber attacks ahead, according to financial and reputation management experts who warn that the worst is yet to come.
Eric Schiffer, chairman of Patriarch and Reputation Management Consultants, told FOX Business the scale of the theft underscores the growing cybersecurity challenges facing major financial institutions.
“I look at this as one of the biggest thefts in the world of all time, and it’s sad,” said Schiffer.
Schiffer warned that this week’s incident could mark the beginning of a wave of more sophisticated cyber attacks, especially as artificial intelligence becomes more powerful.
THIEVES STOLE $6.3B FROM BINANCE: ‘BIGEST HACK IN HISTORY’
Binance founder Changpeng Zhao said the exchange’s security incident appeared to be a hack and thanked the cryptocurrency company for helping freeze the affected assets. (Ben McShane/Sportsfile for Web Summit via Getty Images/Getty Images)
“I think AI hacking is coming,” he said. “And there will be more pain.”
He warned that businesses cannot treat cybersecurity as an issue that can be dealt with after an attack.
Binance, the world’s largest cryptocurrency exchange, confirmed on Friday that hackers had stolen approximately $6.3 billion in digital assets. The company later said it had saved more than $6.34 billion in corporate funds to cover losses, including $5 billion it had held in cryptocurrencies that were stolen.
The exchange said it is buying additional tokens through market and over-the-counter transactions to replace assets that are still affected.
Binance also said that approximately $3 billion in stolen assets have been frozen with the help of industry partners, with recovery efforts continuing. Exchanges temporarily suspend withdrawals while conducting security checks.
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Eric Schiffer, chairman of Patriarch and Reputation Management Consultants, warned in an interview with FOX Business that the massive Binance hack could signal more cyber attacks. (FOX Business / FOXBusiness)
The company pledged to cover the customer’s losses, saying it would “absorb the financial impact of these stolen funds, not our users.”
Despite the scale of the theft, which market analysts described as “the biggest hack in history,” Schiffer predicted that Binance would recover financially, but he warned that restoring investor confidence could prove more difficult.
“For a company like Binance that allegedly has a balance sheet that’s beyond hit, they’re going to recover,” Schiffer said. “It’s painful. It’s definitely a hit in credibility. They want [to] losing a lot of asset holders who are now doing business with them.”
Binance said an initial investigation revealed a compromised laptop, but subsequent findings revealed additional intrusion points. The company said an internet-connected cryptocurrency wallet was compromised, allowing the unauthorized withdrawal of an estimated $6.3 billion in digital assets.
Binance said there was no evidence that the wallet’s private keys were leaked and promised to release a detailed technical report once the investigation is complete.
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President Donald Trump says his administration is investigating whether North Korean hackers were responsible for the theft of $6.3 billion worth of cryptocurrency on Binance. (Kevin Dietsch/Getty Images)
President Donald Trump also weighed in on the breach on Friday, saying his administration was investigating whether North Korean hackers were responsible.
“We don’t know. We are looking at that. The hack with Binance. We are looking at that,” Trump told reporters in the Oval Office, before expressing concern about the risks associated with digital currencies.
“I always think it’s a bit dangerous,” he said, referring to cryptocurrency. “But now they say they have quite a lot under control. We’ll see.”
The US Secret Service confirmed to FOX Business that it is working with private sector partners to trace and recover the funds stolen from Binance.
“Secret Service investigators are working with private sector partners, including Circle, to identify, freeze, track and recover the funds stolen from Binance on Thursday,” a spokesperson said.
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Binance temporarily suspended deposits and withdrawals after a security incident that founder Changpeng Zhao said appeared to be a hack. (Omar Marques/SOPA Images/LightRocket via Getty Images/Getty Images)
The agency said it is also coordinating with the U.S. Attorney’s Office for the District of Columbia and other law enforcement partners to identify those responsible for the violations.
Blockchain intelligence firm TRM Labs attributed the attack to TraderTraitor, a North Korean state-sponsored hacking unit, saying it reached a high-confidence assessment based on on-chain and off-chain intelligence.
TRM Labs said the attackers moved about $6.36 billion from the Binance wallet in 10 blocks, with most of the assets being moved in about 20 minutes.
For Americans concerned about the security of their cryptocurrency holdings, Schiffer recommends carefully evaluating the financial institutions and platforms they trust with their assets.
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“If it’s crypto, what [you] with a trusted brand? Is the brand thought of? Is it forward thinking? Do you believe it?” he said.
Schiffer also suggested that investors consider alternatives to holding cryptocurrency directly on exchanges, including exchange-traded funds.