What Will Happen to Users’ Assets?
Network data reveals that more than $43 million in cryptocurrency was stolen from the BingX exchange on Friday, September 20th (30th of Shahrivar, in the Iranian calendar). According to CoinDesk, the theft was discovered when the technical team of BingX noticed unusual withdrawals from one of its hot wallets.
Initially, the exchange managers declared the value of the stolen assets to be insignificant, but after further investigation, it became clear that the attack had caused damage worth tens of millions of dollars. As a result, the BingX hack is now listed among the largest hacks in the history of cryptocurrency exchanges.
The hackers, in the first phase, around 4 AM on Friday Singapore time, stole approximately $26 million and a few hours later, about $16.5 million from the exchange’s wallet. These assets were transferred to decentralized exchanges. The stolen cryptocurrencies included Ethereum (ETH), worth $13.25 million; Binance Coin (BNB), worth $2.3 million; and Tether (USDT), worth $4.4 million. In addition to these main coins, more than 360 other altcoins were also stolen.
After suspecting a hacking attack, BingX moved to transfer its assets in order to prevent further access by the hackers. This action continued until the following day, which ensured that other assets, including Bitcoin (BTC), Ethereum, and Solana (SOL), were protected from the hackers.
According to BingX’s own claim, most of the exchange’s assets are stored in cold wallets, and only a small amount is kept in hot wallets for daily transactions and user transfers.
Since BingX initially attempted to cover up and deny the issue, it faced heavy criticism from users. However, Vivien Lien, the Chief Product Officer of the company, tweeted that the exchange would compensate any losses incurred by users. Lien added: “The lost assets are minimal and controllable. This incident will not affect our ongoing business operations. Trading services will continue as usual. Deposits and withdrawals may experience temporary delays, but everything is expected to return to normal within 24 hours.”
Network data visible on etherscan.io shows that most of the stolen assets were transferred to decentralized exchanges such as Uniswap and Kyberswap, where they were swapped for Ethereum and Binance Coin. On the other hand, BingX is trying to block the transferred tokens to prevent further access and swapping, but given that a large portion of the assets have already been swapped, it seems that the blocking efforts may not be very effective. As a result, BingX will likely have to cover the entire loss itself, compensating users.
The hopeful news is that according to Vivien Lien, deposits and withdrawals of Tether, Bitcoin, and Ethereum returned to normal within 24 hours, and users did not face any issues with their assets being locked. However, the exchange has warned users about possible delays in transactions due to further security investigations and has announced that withdrawal services for other cryptocurrencies will gradually be restored.
Additionally, due to an upgrade in wallet security, users’ deposit addresses have changed, and old addresses are no longer usable. Therefore, users must visit their account section on the exchange as soon as possible to obtain the new deposit addresses.
According to the latest message displayed on the BingX user dashboard, deposit services for USDC, Bitcoin, Ethereum, Tron (TRX), Ripple (XRP), and Solana (SOL) have been restored, and deposits for other cryptocurrencies will be enabled as soon as possible.
The quick restoration of normal conditions and the resumption of exchange operations is considered a positive point for BingX and, especially, the cryptocurrency community. This is because the nature of this industry is intangible and digital; therefore, any misuse of public ignorance and user awareness can undermine public trust and slow down the growth of this 15-year-old phenomenon.
BingX is one of the most popular exchanges among Iranians. This means that a significant portion of Iranians’ assets are held in this and other foreign exchanges, while such an incident has never occurred with Iranian exchanges. However, many users still prefer to use foreign exchanges that are out of reach. Had this event occurred with an Iranian exchange, one can only imagine the aftershocks and how it would spread to ministries and government agencies, and how long and in what manner the damage would have affected users.
Although blockchain technology is inherently borderless and decentralized, the lack of proper oversight by regulators and governments can deal a devastating blow to this industry and the hard-earned assets of the people. Therefore, if cryptocurrency service providers’ activities are regulated by governments, it would bring peace of mind to the public, exchanges, and governments alike, making the use of this technology more tangible, acceptable, and feasible for countries.
