Alleged Hack of Binance Triggers Huge Slide in Bitcoin

Bitcoin prices are in freefall Wednesday on speculation that major crypto exchange Binance has been hacked. Although the exchange has denied being attacked, several users reported that their altcoin holdings were liquidated unexpectedly and without consent.

Binance Suspends Trading

Traders on Wednesday took to Twitter and Reddit to complain about Binance suddenly liquidating their altcoin holdings at market rate without consent or prior notification. Some have speculated that Binance’s trading bot was at the heart of the issue, while others believe hackers may have orchestrated an attack.

The exchange issued a temporary suspension on trading and withdrawals to investigate the matter further. A company spokesperson responded to a Binance Reddit thread informing traders that a formal investigation was underway.

“We 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,” they said.

Launched in September, Binance has quickly emerged as one of the world’s foremost cryptocurrency exchanges. The platform ranks second in terms of trade volume behind South Korea’s OKEx. However, on Monday, Binance took the top spot in terms of volume, processing more than $1.8 billion in daily transactions.

Viacoin Pump

According to several accounts on Reddit, Twitter and elsewhere, Binance’s trading bot may have been hacked to prop up the value of Viacoin (VIA), a little-known cryptocurrency that shot up more than 250% on Wednesday. At the time of writing, Viacoin was trading at around $3.70, a gain of 50%. Trading volumes for the altcoin surged to $194 million.

Trading bots are software programs that buy and sell financial assets on behalf of traders. The algorithm executes buy and sell orders based on market movement and pre-defined rules.

Bitcoin plunged by as much as 11% on the news, hitting a session low of $9,692.12, according to CoinMarketCap. It was last down around 8% at $9,939.

Several updates have trickled in over the hour, all of which suggest Binance is desperately working to resolve the issue. The exchange struggled with server downtime after a flood of complaints about wrongly exchanged cryptocurrencies. The exchange’s customer service department has told users that a password change was not required at this time.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi