Written by: Aaliyah Ahmed, The Times
Compiled by: Chopper, Foresight News
Binance suffered a hack last week, and with the world's largest crypto exchange in trouble, investors are beginning to worry about the future of their crypto assets.
I put in £5,000 to buy XRP, and I regret it
Max Daniels, 33, works in communications, and he is agonizing over whether to cut his losses in time. He has put a total of £5,000 into cryptocurrencies, and last week's hack of Binance, the world's largest exchange, has only deepened his worries.
Last summer, after seeing relatives and friends make fairly substantial gains in the crypto market, Daniels bought XRP through Coinbase. When XRP was around £1.6, he put in £4,000; later, as the price continued to rise, he added another £1,000. Now that holding is worth less than £3,000, and feelings of regret keep welling up.
Daniels, who has just moved house, said that he and his wife plan to sell everything once crypto asset prices recover and the losses look less glaring. "We aren't expecting to break even at all, let alone make money. We just hope the losses won't be as ugly as they are now," he said.
The Binance hack is regarded as one of the largest financial thefts in history, with hackers stealing $6.3 billion worth of assets from the exchange's crypto wallets.
Binance said the hack stemmed from human error: an engineer accidentally downloaded malware in June; later, hackers faked an interview to trick another employee into installing malicious software. Of the $6.34 billion stolen, $2.85 billion has already been frozen and intercepted by the platform. The FBI attributed the attack to a North Korean hacker group.
Although Daniels did not store his coins on the Binance platform, this security incident made him begin to question just how safe cryptocurrencies really are. "Ultimately, this is a digital asset; everything is born in the digital world and may also be destroyed in the digital world. Once a hack happens, the entire market will be affected in the long run."
After this incident, he began monitoring his investment more closely and changed the price alerts on his Coinbase account, ready to sell and exit with his wife once the price reaches his psychological target.
Daniels regularly deals with clients in the crypto industry in his work, and he is well aware that the industry has various risks such as "bad actors" and market manipulation. But the lure of high returns, combined with the external market atmosphere, still drove him to take the risk and enter.
He put 60% of an inheritance into an S&P 500 index fund, 30% into XRP, and the rest for daily expenses. The returns on the index fund have roughly offset his losses on crypto. "I'm not by nature the type who loves high-risk speculation. To be honest, index funds always rise over the long term."
"I have lost confidence in crypto trading platforms"
Tom Stanley, 35, is an IT director in West Yorkshire, and he has invested about £20,000 in Bitcoin, Ethereum, and Dogecoin.
The Binance hack made him begin to worry about whether the trading platforms that custody his assets are safe enough. He has been investing in crypto for ten years, mainly using Coinbase. Although there has been no abnormality in his own account, he has begun to spread some assets across multiple trading platforms to diversify risk.
"Ultimately, as long as there is one vulnerability on the platform, or one human error by an employee, the entire exchange can be compromised."
He worries that hackers can bypass conventional security protections such as SMS verification codes, facial recognition, and voiceprint recognition. After the Binance incident, he checks his account more frequently, but he has not completely given up on crypto because of it.
In his view, what has been exposed are flaws in custody and trading platforms, not the underlying technology of cryptocurrency itself. "What I have lost confidence in is these platforms, not blockchain technology."
Coinbase responded: ownership of assets on the platform always belongs to users, and user assets will not be lent or used without permission. The vast majority of assets are stored in secure offline cold wallets, supported by multiple protections, including system access permission controls and various tools that help users protect account security.
