More than $2.5bn of the $6.3bn taken was withdrawn in one transaction alone. Photograph: Beata Zawrzel/NurPhoto/Rex View image in fullscreen More than $2.5bn of the $6.3bn taken was withdrawn in one transaction alone. Photograph: Beata Zawrzel/NurPhoto/Rex Binance Explainer How big a deal is the $6.3bn Binance crypto heist, who did it, and are investments safe? The incident at Binance could be the biggest theft of any kind in history. We answer some key questions
North Korean group blamed for $6.3bn crypto heist
Prefer the Guardian on Google The world’s largest cryptocurrency exchange has been hit by a $6.3bn heist that, according to experts, is likely to be the work of North Korea .
This is not the first time a crypto market has been targeted by hackers, and the rogue state has a track record of this type of theft. Here we answer some key questions about what’s happened:
It could be the biggest heist of any kind in history, according to Elliptic, a consultancy specialising in crypto-related crime. The incident, which took place late on Thursday, is more than four times bigger than the previous largest crypto hack, the $1.5bn one targeting the Bybit exchange last year . Elliptic says there does not appear to be anything comparable in the pre-crypto era.
“This incident is almost certainly the single largest known theft of any kind,” says Tom Robinson, the consultancy’s chief scientist. “Before Bybit, that record was held by Saddam Hussein, who took $1bn from the central bank of Iraq in Baghdad on the eve of the 2003 Iraq war. The Binance theft is more than six times larger.”
This digital asset operates online, outside the traditional financial system. There is no physical version of the most popular form of crypto – bitcoin – or its peers, such as Ethereum, Ripple and Dogecoin.
A cryptocurrency such as bitcoin runs on a combination of encryption, which is the sort of technology that keeps your WhatsApp messages safe, and peer-to-peer networks that allow computers to connect without a central server (think of the music-sharing sites like Napster at the turn of the century).
In short, the owner of a bitcoin (or part of a bitcoin; you can buy them in fractions) has access to a private key – like a long password – which is needed to access the funds. These transactions are all stored and displayed on a publicly available ledger, like a school register, known as a blockchain. You typically store your private keys in a “crypto wallet”.
There are varying estimates for how many cryptocurrencies there are but Coingecko, which monitors the market, claims there are more than 22,000 coins. The entire market is worth about $2.7tn, so it is not a surprise that hackers and rogue states looking for funds are interested in a corner of the global finance industry that has so much money, is largely unregulated and is vulnerable to digital thieves.
A cryptoexchange is where you buy, sell and trade digital assets such as bitcoin. They host your crypto wallets, which are typically “cold”, meaning they are not connected online and can be kept safer from hackers. A smaller amount sits in “hot” wallets which are linked to the internet so they can be used for quick withdrawals, making them of greater interest to hackers. Binance is the world’s largest of these exchanges in terms of the number of trades it carries out every day – at a value of about $95bn daily.
It does not appear that private keys were hacked. Instead, a Binance engineer’s laptop was i…