Binance HACKED.. Bigger Crypto Contagion Has Just Begun? Transcript

00:00 They are calling it the largest crypto heist of all time. >> Binance trying to limit the fallout from what's being called the biggest theft in history >> and almost all of it happened within the space of about 20 minutes yesterday. >> So the largest crypto exchange on Earth, Binance has been hacked for billions of dollars. >> So how big? Well, Binance says hackers stole $6.3 billion.

00:19 As of now, about half of that sum has been frozen as Binance tries to locate and recover the rest. >> This is something we have never seen before. to this magnitude. It's being called the largest cyber attack or just largest hack in human history, leaving many investors scared. >> I'm an outsider to the business. I don't fully understand it like the majority of our viewers.

00:43 They're going to think twice about crypto after this, aren't they? In [music] the next 10 minutes, I'm going to share with you exactly what what we know, how this happened, and what you can do as a crypto holder next to make sure your funds as best you can never get hacked as best you can. Also, prices have began to tank. Is this a one-off or should we expect more sell pressure on the market?

01:06 If you know somebody in crypto sent him or her this video, this could save them. If you know somebody in crypto sent him or her this video, it could save them. And number one thing to understand right right off the bat, Binance CEO has come out and said, "We will cover all funds. Use your funds are safe and we'll reimburse you." >> I want to be clear.

01:26 We're committed to covering all hack losses through our company funds. Your assets are safe. >> Now, does Binance have the funds to cover $6 billion for their users? Yes. Binance has hundreds of billions of dollars. They're a very profitable exchange and they have the money. >> Binance has reserved over 6.34 billion of company funds to cover the stolen assets.

01:51 >> Also, it's worth noting that most of the stable coins that were stolen have already been frozen by Circle and Tether. What you'll notice, what tends to happen with these hackers is when they steal crypto, they try and get rid of the centralized crypto uh as fast as they can because if it's centralized, it can be frozen. Stable coins are centralized.

02:12 They can be frozen and the USDT and the USDC have been frozen by those issuers. So those coins are safe. Now the hackers still have 1.45 billion in Bitcoin, almost a billion in ETH, also some Tron, some Goldback stable coin, some of Ripple stablecoin, and millions of dollars of other random additional cryptos. Now the bigger question is why did this happen?

02:36 And then has the contagion just started? Well, first, how did this happen? Well, turns out this was not an AI hack. According to Binance themselves, they say Binance's initial investigation suggests that the security incident may have involved a compromised Dev Op engineers laptop, which allowed an attacker to gain access to a service container and submit unauthorized withdrawal transactions.

03:04 Meaning $6 billion in crypto got stolen because one engineer had his laptop compromised. If true, that's an insane single point of single point of failure. Listen to Binance founder Richard Tang explain more. >> This was not carried out by one person. Our initial investigation suggested that the security incident may have involved a compromised laptop.

03:27 However, our subsequent investigation has uncovered additional points of breach. This was a complex attack. The attacker had also used self-destruct mechanism that destroyed tooling and traces as they went, making it more difficult for us to trace and investigate. The attacker used a known multi- signature protocol EIP702 to obtain onchain execution approval of a hot wallet.

03:58 And if all that sort of sounds confusing, the main the most important thing for you to understand is the base level protocols, meaning the coins, the cryptocurrencies, Bitcoin, ETH, etc. They were not compromised. Bitcoin is the strongest computing network in the world. It was the centralized exchange that had a system failure that had a flaw in their system that the hacker was able to exploit.

04:20 And >> I don't fully understand it. Like the majority of our viewers, they're going to think twice about crypto after this, aren't they? >> Saying something like this now means crypto is worthless. Oh, hey, the largest exchange can't even keep their crypto safe. How can anybody, why would anybody invest in crypto? Understanding this is like saying back in, let's say, the pirate days, wow, pirates stole gold from your ship.

04:49 Why would anybody want gold if pirates can easily steal it? We upgraded our ships. Our ships are much better than five years ago, yet they're still able to be stolen. The hackers will get better. The systems protecting it will get better. If crypto was not valuable, they wouldn't be trying to steal it. Now, Bitcoin dipped on the news. The entire crypto market is dipping on the news.

05:09 Are we finished or is the contagion just beginning? And I will say this, something that I really liked are all the other major heavily respected centralized exchanges. Many of them came to Binance's aid. For example, Coinbase stating last night, Coinbase is safe and secure. We're actively monitoring the Binance situation and have reached out to their team to offer our support.

05:34 And actually, Coinbase just made this major announcement. Coinbase launches the first global trading competition. This starts November 4th and up to $2 million in rewards. Now, anybody that follows this channel understands that Coinbase as an exchange partner, anybody who signs up for Coinbase with my link down below, you can get 80% off all fees lifetime.

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06:20 So, you must register in the next few days. Again, even if you have already used my link to get the bonuses, get the fee reduction, you must register separately. So, I'll put both links down below. Thank you Coinbase for sponsoring this section of today's video. And that brings us to the big question. Is there a problem in the crypto market? Or actually, I should say is will crypto go lower?

06:41 Because once the biggest exchange on Earth was hacked, Bitcoin dipped about five 6%. Actually, that's kind of a bullish sign and only dipped that much. And Ethereum and altcoins dipped more. We That's already happened. The bigger question is what's going to come next? like how much of effect will a hack like this have on the crypto market? And it should be noted to to give you some perspective.

07:07 This is why you subscribe to Altcoin Daily for some perspective on the crypto market. This actually isn't the biggest hack in crypto history in Bitcoin terms. We've actually seen much bigger. Look at the data. Saw a few discussions about the size of hack, why I impacted Bitcoin is small, etc. And well, 6.3 billion is the biggest in US dollar terms, but not the biggest in BTC terms.

07:32 Mount Gaus back in 2013, I believe, was over 650,000 Bitcoin hacked. Of course, Bitcoin was a lot smaller back then. Other important numbers to consider, the percent of Bitcoin in relation to the total BTC supply, i.e. market impact. Mount Gaus is big there again at 5% plus. What does this mean? It means that even though $6 billion total is hacked and let's just overemphasize it and say what if what if even two billion of that is Bitcoin.

08:10 Does that mean that we're about to see $2 billion of Bitcoin sold on the market? Well, Bitcoin's 24-hour trading volume, just the amount that's traded in in a day, is 201 billion. So, if two billion was sold, that's less than 1%. That's nothing. Bitcoin's about 6% dip was just an overreaction to some major news. So, really, $6 billion total has almost a negligible amount of actual market impact.

08:40 Also comparing Mount Gaus to where we are today, the number of users impacted and the percent of users assets impacted. Mount Gaus, the largest centralized exchange at the time, and FTX, which was not a small exchange, were all near 100% of users and their assets that were hacked. It was a minuscule amount compared to Mount Gox and FDX today. And then also most important, who was impacted?

09:07 Does the platform cover it all? Well, there actually was in this case only one victim as in the recent two sex cases and Binance. Meaning in this case really Binance was the only victim because they'll refund users and they have to use a percent of their treasury to repay that. They actually have to buy about not all six billion but they have to buy multiple billions on the open market or in OTC deals to get their funds back and repay users.

09:37 That's actually buying back the coins. That's not bad on the open market. That's actually positive for price. And then looking forward, what does this mean for the price of Bitcoin and crypto in general? Number one, traditional markets are crashing. Almost $1 trillion has been wiped out from the US stock market at open as the S&P 500 dumps 1.11%. I mean, Intel, which is a blue chip company, down 31% today.

10:01 Reddit down 30%. Roblox down 20%. Dell SanDisk down 12 to 15%. The crypto market is actually holding up much much better than traditional markets. Sort of a decoupling, not correlated. Yes, in the shortest time frames they are correlated everything else, but crypto is holding up much much better. Why is that? Well, the big reason is because the leverage was already wiped out in crypto through the bare market we've had this last year, right?

10:33 Crypto is the most sensitive to liquidity and we wiped out the leverage in the system first. The stock market still has leverage in it and that has to get wiped out now. And that actually makes an asset class stronger, right? Gets out the dead wood, leaves room for the new growth. That's positive. And in terms of what comes next, one of the other major positive moves that just happened, if Bitcoin can hold the 50-week moving average, which we we returned right to like a magnet, that is to me one of the most bullish

11:08 signs we have seen for crypto because because every other bull market in history, I mean, every single one after we popped out off of the 50week moving average, we always retested. it. Now, whether we went up a lot and then we were drawn back down for the retest or we went up a little like now and we retested, it had to happen sometime. It literally happens happens.

11:30 And by the way, sometimes we break under and we're forced to retest it again. But it always happens. And if we hold, that signifies the strength in the crypto market, letting the big money understand, oh, a lot of the sellers are already out of this system. Buyers are stepping back in. So, because we retested the 50week moving average from a technical level that's very very positive.

11:54 I will keep tabs on this. If anything changes, I will let you know. Click subscribe to Altcoin Daily for one video per day, keeping you informed on this