Crypto Week: Binance Bridge Hack and MtGox Payouts

The most shocking news of the week is the Binance blockchain bridge hack of at least $100 million. The Binance blockchain, also known as a BNB Chain, suspended transactions and fund transfers after discovering the vulnerability. This vulnerability is of particular interest as even after the discovery of malicious activity, security systems considered such actions as valid for three more hours. The hacker forged the low-level proof messages, allowing to mint new BNB tokens. Such an activity was considered by the security system as actions carried out by large coin holders. The unknown hacker was empting the bridge but for some unknown reason he or she did not convert minted stablecoins. The BNB chain team said the attacker has initially withdrawn 2 million BNB stablecoins worth $568 million but managed to transfer $110 million before transactions were suspended.

Binance chief executive Changpeng Zhao said client funds were unaffected since stolen tokens were not taken from preexisting wallets. “The issue is contained now. Your funds are safe. We apologize for the inconvenience and will provide further updates accordingly,” said Zhao. However, a Venus landing protocol fell victim to the hack as the attacker deposited 900,000 stolen BNB tokens and borrowed $147.5 in stablecoins. So, the Venus project has now stolen tokens as a provision. Binance may cover this bad debt by transferring the respected amount of BNB to Venus, while Venus may sell these tokens to replenish stablecoin deposits. Thus, placing pressure on BNB tokens may be sensible.

MTGox lenders that suffered from the exchange bankruptcy in 2014 have finally been given an option to get their stolen funds. They could provide their account details and choose the payment option before January 10, 2023. Around 150,000 Bitcoins were blocked on the wallets associated with the MtGox. Crypto investors are closely monitoring MtGox creditors’ efforts as a large sell-off of released Bitcoins would badly affect coin prices. But creditors are unlikely to suffer badly during the conversion of frozen Bitcoins, so a vast sell-off is unlikely to happen.

The Cryptomarket continues to edge lower after the European Central bank (ECB) confirmed its fears over sustainable high inflation, and expressed willingness to bring prices under control at no matter the cost, including economic downturn. However, ECB’s efforts alone could not be enough to tame inflation amid many political risks.

Rising interest rates in the Eurozone would certainly lead to a debt crisis as many countries of the European south are heavily indebted and are suffering from high borrowing costs already. The ECB has to intervene in the debt market as the weakening Euro is largely contributing to inflation. But, on the other hand supporting the Euro requires higher interest rates. Anyway, this is not a friendly environment for risky assets, including cryptos.

Bitcoin prices continue to hover around $19,000. There are no reasons for digital asset prices to rise. So, a previous first downside target for Bitcoin at $18,100 is intact. Overall, prices may plunge to $10,000 per coin during the current market correction.