Binance’s Recovery of Stolen Crypto Illustrates That Digital Assets Aren’t a Promised Land for Bad Actors
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A Fox Business article announced that Binance recovered a portion of the assets that were stolen from the recent Ronin hack. Just under $6 million of crypto was recovered less than one percent of the total heist but there is hope that larger segments will continue to be recovered over the coming days. US authorities have tied the exploit to Lazarus hackers out of North Korea.
According to the article,
“Binance discovered the stolen assets by literally following the money through a series of moves made by the hackers. Treasury identified an Ethereum wallet address tied to the group. Binance traced the stolen funds when they were moved from the hackers’ wallet to Tornado Cash a service that allows for anonymous token transfers on the Ethereum blockchain. The funds then made it to the exchange.”
The stolen assets were found in 86 different Binance accounts. What’s notable in this case is that even after the use of Tornado Cash, Binance was able to successfully trace the funds.
When we hear certain politicians and bureaucrats speak, it is almost as if Bitcoin and other cryptocurrencies simply anonymize the user. As this case study shows, those soundbites are based on fearmongering more than reality.
The desire to cast Bitcoin and other cryptocurrencies as some kind of anonymous boogeyman that facilitates malfeasance is in no small part due to fear. Fear that a decentralized system of finance is becoming more popular and mainstream. Fear that those who have historically had a near-veto-proof grip over our financial system that those people and institutions can’t wield the same kind of control over cryptocurrencies.
That’s why in the coming fight over CBDCs, it is so important to insist that any digital currency issued by central banks comes with the privacy the citizenry deserves.
Bitcoin transactions are tracked on an immutable blockchain that nobody can interfere with or alter. Most of the issues that we’ve seen over the past few years can be traced to a failure to properly implement KYC (know your customer) and AML (anti-money laundering) procedures procedures that, in many cases, were required by law.
Those procedures are required for good reason. What the industry needs is for governments to come together and develop a commonsense set of guidelines for exchanges to implement rules that protect the populace while freeing crypto-preneurs to do what they do best innovate.
Once governments work the kinks out of their regulatory regime, exchanges will be better able to respond to the threats the industry faces. They will be forced to uniformly execute these regulations, ensuring that the industry is safe for those who wish to participate.
This latest recovery illustrates that the tech itself is simply not the problem. Each exchange must begin to implement a better technology apparatus, complete with ongoing security audits. In conjunction with government oversight and better implementation, this will limit the risk found throughout the industry.
Richard Gardner is the CEO of Modulus. He has been a globally recognized subject matter expert for more than two decades, offering complex insight and analysis on cryptocurrency, cybersecurity, financial technology, surveillance technology, blockchain technologies and general management best practices.
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Author: Richard Gardner
