Major crypto exchange CoinBene has come out to assure its users that the prolonged maintenance, which rendered its services unavailable to thousands of users was not due to a security breach.
Speaking via an update on Twitter on March 27, CoinBene responded to concerns from its users, who believe that the prolonged delay in deposits and withdrawals were signaling a breach of its wallets. In the statement, the exchange pointed out that the maintenance was merely an upgrade to their wallets’ security.
“User assets on CoinBene platform are 100% secure, our platform promises that if any user assets will be lost, we will compensate 100%,” the exchange explained.
Going further to note that:
“The CoinBene security team monitors any anomalies at all times and will issue a warning the first time to prevent any possible risks.”
CoinBene’s Announcement Causes Panic
The Singapore based exchange announced scheduled maintenance on March 26, saying that functions such as deposits and withdrawals will be affected “in order to enhance the user experience” of their users.
The second the announcement was made, investors using the exchange were sent into mass hysteria, with many reporting that this was a sign that the platform had been breached.
In a now-deleted tweet, Nick Saporano, Chief Innovation Officer at blockchain startup the Divi Project, explained that data on Etherscan, a tracking platform for Ether transactions, revealed a massive outlay of assets from the exchange’s platform. Summarizing his point, he opined that this could be a sign of an already-conducted attack on the exchange’s wallets.
Responding to Saporano’s tweet, however, Twitter user Steve Morrison explained that it was most likely the exchange was transferring crypto holdings into a cold wallet—which is secure.
Tokens have been moved to a wallet commented on as a "cold wallet".
— Stephen Morrison ???? (@HowManyMiles_) March 26, 2019
Exchanges’ Behavior on Hacks Provides Justification for Widespread Panic
It’s not completely out of line for CoinBene’s investors to feel threatened by the company’s announcement of “scheduled maintenance.” Many cryptocurrency exchanges seem to have adopted the habit of reporting hacks much later than they occur.
Rather, they shut their services down and call them “unscheduled maintenance,” “maintenance services,” or merely coin up some technical term while they try to remedy things from their end. This was the same model deployed by the recently hacked DragonEX, where it took its servers down for maintenance and then announced a hack 24 hours after.
Then, when they accept defeat and finally own up to the public, they resort to some other technical term (usually a “security breach”) to downplay the hack.
Considering this trend and the frequency at which digital asset platforms are breached, any exchange that reports scheduled maintenance- albeit genuinely- will get a few eyebrows raised.
Nothing is wrong in Paradise
As stated, CoinBene’s clarification came a day later, with the exchange doing its best to quell the fears of its users and the larger crypto society as regards its status.
The exchange revealed that they had received reports from other crypto exchanges about the thefts of their users’ funds. While they didn’t name the exchanges which provide them this information, their security team decided to take decisive action to prevent an occurrence of such on their platform.
CoinBene also assured its users about the prolonged maintenance in a separate tweet, while imploring anyone who had reservations about the security of their funds to get in touch with its support team.
Some few hours after, the company announced that deposits for Bitcoin (BTC), Tether (USDT), and Ethereum were reopened to the general public.
CoinBene is currently the 9th largest crypto exchange in the world by daily trade volume, according to Coinmarketcap data. It accounts for $722.8 million in trades recorded in the last 24 hours. Undoubtedly, an attack on an exchange of its stature will send concerns to the entire global crypto ecosystem.