Once again, if needed, it was proven that cryptocurrencies can be really volatile assets. Bitcoin dropped from $10,740 to $9,690 in just a few minutes, registering a 10.8 percent crash, sending the community into despair.
Unlike other times, it’s a bit difficult to tell what is causing this massive drops, but this time, according to TechCrunch, the reason is technically known. Binance, one of the major exchanges in the world, detected some unusual activities and temporarily stopped withdrawals.
Ever heard of Viacoin before this?
A lot of traders spotted an unusual behavior of Viacoin, just before the crash. Specifically, the coin registered a huge price increase on Binance, as it’s total market cap jumped from $64 million to $159 million in just a few minutes.
Obviously, this didn’t look right, so the exchange started investigating the issue, detecting unauthorized sell orders.
“We are investigating reports of some users having issues with their funds. Our team is aware and investigating the issue as we speak,” the representatives said on Reddit. “As of this moment, the only confirmed victims have registered API keys (to use with trading bots or otherwise). There is no evidence of the Binance platform being compromised.”
After the statement was released, it was believed that a third-party service or app was compromised and its users were relying on API keys to take control of Binance accounts. Possibly, a hacker developed a bot able to submit tons of orders, at the same time.
The damage was most likely done
Even though the withdrawals were stopped, it could be too late, as the hacker might have a big position in Viacoin or another exchange. Also, he could have sold a big amount of Viacoins, right after manipulating its price on the exchange platform.
This unfortunate event confirms that security still remains a very important issue when it comes to cryptocurrency trading. Our recommendation is to avoid storing your digital coins on an exchange and relate on a hardware wallet instead or one that allows you to control the private keys.