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Binance KYC Leak: All We Need to Know

[vc_row][vc_column][vc_column_text]On August 7, yet another crypto-related scandal took place, again, affecting the world’s largest cryptocurrency exchange; Binance. A series of Telegram groups founded by a single source claimed to possess more than 10,000 personal photos of KYC data owned by Binance. While the claims have since been refuted by Changpeng Zhao, the Binance CEO, the group remains adamant that should Binance fail to offer them 300 Bitcoins, they will go ahead and release all the data in their possession. In the current market, 300 BTC amounts to over $3.5 million cash in dollars, which the company is not willing to negotiate up to this point.
Worth noting, the alleged hacker set up dedicated Telegram channels containing sensitive KYC data, but reports have it that the channels have since been shut down. According to Binance, all its confidential data is characterized by a digital watermark which lacks in the leaked photos, raising eyebrows on the authenticity of the circulating material.
Commenting on the issue of security, Binance said;

There are inconsistencies when comparing this data to the data in our system. At the present time, no evidence has been supplied that indicates any KYC images have been obtained from Binance, as these images do not contain the digital watermark imprinted by our system. With that said, our security team is hard at work pursuing all possible leads in an attempt to identify the source of these images, as it remains unclear where they were obtained.

Binance further claimed that the released images could be dated back to February when the company had outsourced some of its registration duties to a third party service provider following an overwhelming interest in cryptocurrency trading. When Binance requested the hacker to provide more details regarding the same, the individual gave nothing out, and instead demanded the 300 BTC.

What we know so far

There is nothing concrete at this point, but there is a strong feeling that Binance is trying hard to divert blame to the provider who handled the company’s KYC data at that time. Stop-gap solutions such as KYC data management are necessary, almost inevitable, but that should not be used as an excuse to bail out Binance. However, even the fast-growing cryptocurrency industry has loopholes, and it remains a work in progress at least until the boat has stabilized.
A similar incident took place earlier in the year where Binance lost approximately 7,000 BTC worth $40 million back then. Everything pointed towards a looming downfall of the exchange after it was widely viewed as irreparable damage on the part of the company. On the contrary, things have only gotten better. There will be questions from interested parties, though.
One, the same exchange has been targeted twice in the space of months. What lies ahead for the company and its massive following? Is something wrong with their security system, and are they going to survive the recent onslaught?
It is too early to make any call, at least until some of the concerns have been substantiated, but one thing is for sure; whatever it is, it is a cause for concern.
Changpeng’s counter tweet on the KYC leak after the incident did not seem to address the real issue, but instead it provoked thinkers to question the preparedness of Binance as a top exchange. Looking at it in a more positive perspective, the price value of BNB, (Binance Coin) has risen by over 12 percent over the short period of uncertainty. That indicates that the crypto community globally cares less about the possible hack. It should be remembered that in April this year, sensitive data of over half a million Facebook users was leaked. That included identification details and locations. Before then, in 2018, Cambridge Analytica had accessed private data of over 87 million Facebook users. When grave repercussions were expected, no one seemed to care, and instead, Facebook has continued to grow from strength to strength.
Similarly, as recently as June this year, Bithumb lost approximately $30 million through a hack, but it still registers a turnover of around $700 million in volumes daily.

Possible outcome

If it turns out that the stolen data is real, that is a lot of money in the hands of criminals. Top analysts say that the 10,000+ leaked images could be used by miscreants to bypass user identification measures or end up facilitating numerous bank drop scams. Leaked KYC data can also be used to generate fake passports and IDs selling for as much as $2,000.
There were also fears that the hacking was meant to create FUD, but while it remains a likelihood, it is clearer that the hacker in question is targeting the ransom bounty. Every possible angle has seemingly been evaluated by interested parties to this end, but every new day has presented new possibilities. Latest to emerge, it is suspected that the hacker once worked with Binance back in May after the previous scandal, where he managed to unearth the people behind the loss of 7,000 BTC from the premier exchange. It is alleged that he was able to recover more than 60,000 KYC files linked with Binance’s customer base. However, it remains only a speculation, and it should be treated as such.

Damage control

Reports from Binance indicate that the company’s security team has offered a 25 BTC reward for any person with information that could lead to the arrest of the person or persons responsible for the breach. It cannot be denied that some damage has already been done, but the exchange is keen to avert any further scandal. How far it goes this time, it is everyone’s guess.

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