Eric Schiffer, president of Patriarch and Reputation Management Consultants, warns that the $6.3 billion Binance hack could signal a wave of cyberattacks.
The massive $6.3 billion cryptocurrency hack at Binance is a warning of potentially devastating cyberattacks to come, according to a financial management and reputation management expert who warned the worst could be yet to come.
Eric Schiffer, president of Patriarch and Reputation Management Consultants, told FOX Business the scale of the theft highlights the growing cybersecurity challenges facing large financial institutions.
“I consider this one of the greatest thefts of all time, and it’s sad,” Schiffer said.
Schiffer warned that this week’s incident could be a harbinger of a broader wave of increasingly sophisticated cyberattacks, particularly as artificial intelligence becomes more powerful.
THIEVES GET AWAY WITH $6.3 BILLION FROM BINANCE: “THE BIGGEST HACK IN HISTORY”
Binance founder Changpeng Zhao said the exchange’s security incident appeared to be a hack and thanked cryptocurrency companies that helped freeze the affected assets. (Ben McShane/Sportsfile for Web Summit via Getty Images / Getty Images)
“I think the bloodbath of AI hacking is coming,” he said. “And there’s going to be a lot more pain.”
He warned that businesses can no longer afford to view cybersecurity as a problem they can fix after an attack.
Binance, the world’s largest cryptocurrency exchange, confirmed Thursday that hackers stole approximately $6.3 billion in digital assets. The company later said it had set aside more than $6.34 billion in funds to cover losses, including $5 billion already held in the same cryptocurrencies that were stolen.
The exchange said it was purchasing additional tokens through market and over-the-counter transactions to replace the remaining affected assets.
Binance also said that approximately $3 billion in stolen assets had been frozen on-chain with the help of industry partners, with recovery efforts continuing. The exchange temporarily suspended withdrawals while carrying out security checks.
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Eric Schiffer, president of Patriarch and Reputation Management Consultants, warned in an interview with FOX Business that the massive Binance hack could signal a broader wave of cyberattacks. (FOX Company / FOXBusiness)
The company pledged to cover its customers’ losses, saying it would “absorb the financial impact of these stolen funds, not our users.”
Despite the scale of the theft, which one market analyst described as the “largest 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 would have a balance sheet that far exceeds the hit, it’s going to recover,” Schiffer said. “It’s painful. It certainly damages credibility. They’re going to lose a lot of asset owners who currently do business with them.”
Binance said its initial investigation pointed to a compromised laptop, but subsequent findings revealed additional points of intrusion. The company said its internet-connected cryptocurrency wallets were compromised, allowing unauthorized withdrawals of approximately $6.3 billion in digital assets.
Binance said it found no evidence that the wallet’s private keys were leaked and pledged to release a detailed technical report once the investigation is complete.
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President Donald Trump said his administration is investigating whether North Korean hackers were responsible for the $6.3 billion cryptocurrency theft from Binance. (Kevin Dietsch/Getty Images)
President Donald Trump also spoke out Friday about the breach, saying his administration was investigating whether North Korean hackers were responsible.
“We don’t know. We’re looking at that. The Binance hack. We’re looking at that,” Trump told reporters in the Oval Office, before expressing concerns about the risks associated with digital currencies.
“I always thought it was a little dangerous,” he said, referring to cryptocurrencies. “But now they say they have the situation under control. We’ll see.”
The U.S. Secret Service confirmed to FOX Business that it is working with private sector partners to trace and recover the stolen funds from Binance.
“Secret Service investigators are working around the clock with our private sector partners, including Circle, to identify, freeze, trace and recover funds stolen from Binance on Thursday,” a spokesperson said.
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Binance temporarily suspended deposits and withdrawals following 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 breach.
Blockchain intelligence firm TRM Labs attributed the attack to TraderTraitor, a North Korean state-sponsored hacking unit, saying it reached the assessment with high confidence based on on-chain and off-chain intelligence.
TRM Labs said the attackers moved around $6.36 billion from Binance wallets across 10 blockchains, with most assets moved in around 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, are you part of a trusted brand? Is this brand thoughtful? Is it forward-thinking? Do you trust it?” he said.
Schiffer also suggested that investors consider alternatives to holding cryptocurrency directly on exchanges, including exchange-traded funds.
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