Binance Co-Founder Denies Blame for $1M Hack Loss

Yi He, a co-founder of the cryptocurrency exchange Binance, has rejected allegations that a breach on the platform was responsible for the loss of $1 million from a user’s account. On June 3, Yi He clarified the situation, stating that the user’s account was compromised due to their own computer being hacked. She emphasized that the security lapse was not on Binance’s end but resulted from the hacker gaining access to the victim’s computer.

According to Yi He, after hacking the user’s computer, the perpetrator was unable to directly withdraw the funds. Instead, the hacker opted to sell the victim’s cryptocurrency holdings, causing significant trading losses. This explanation came as a response to claims that Binance’s security measures had failed.

On the same day, a cryptocurrency trader known as Nakamao reported that their entire account balance vanished due to “counter-trading,” despite the hacker not having access to his Binance account password or two-factor authentication (2FA) details. Nakamao explained that the hacker manipulated his account by holding his web cookies hostage. Once the hacker breached the account, they purchased tokens with ample liquidity in USDT trading pairs and set limit sell orders above market prices for BTC, USDC, and other pairs with lower liquidity.

The hacker further exacerbated the losses by placing numerous leveraged bets against a counterparty. When these trades turned sour, Nakamao suffered a loss close to $1 million. Throughout this ordeal, Nakamao claimed he did not receive any security alerts from Binance, raising concerns about the platform’s responsiveness to such critical incidents.

Binance’s customer service responded by explaining that the hacker had stolen Nakamao’s account login status through a malicious plug-in, which allowed the hacker to operate the account as if they were the legitimate user. The exchange pointed out that it acted swiftly, freezing Nakamao’s account within approximately 1 minute and 19 seconds of receiving the request. By that time, substantial damage had already been done due to the hacker’s transactions.

Binance maintained that the loss was the result of Nakamao’s devices being compromised by malicious plug-ins, thereby placing the responsibility outside the scope of Binance’s security measures. The platform expressed sympathy for Nakamao but reiterated that they could not offer compensation for incidents unrelated to Binance’s own systems.

Nakamao did not agree with Binance’s conclusion and accused the exchange of being aware of the problematic plug-in well in advance. He alleged that Binance had even encouraged Key Opinion Leaders (KOL) to gather more information about the hacker. Despite this knowledge, the hacker continued to exploit the plug-in and steal accounts, implicating poor preventive measures on Binance’s part.

In an effort to prevent similar incidents, Yi He cautioned users against using active cookie plug-ins to streamline their login process, underlining the risks involved. She stated adamantly that Binance could not compensate users when their personal devices and login statuses are compromised by external factors.

Yi He has a background in Chinese television and is one of the few women leading major crypto exchanges. Alongside Gracy Chen, CEO of Bitget, she remains a prominent female figure in the male-dominated crypto industry. Back in April, Yi He remarked on her husband, Changpeng Zhao, Binance’s co-founder, achieving a favorable outcome in his U.S. sentencing over money laundering charges. Her involvement in this incident underscores her significant role and perspective in addressing security challenges within the cryptocurrency sphere.