I’ve just looked into why the bitcoin price is currently plummeting and it appears to be due to Binance, the number one most popular cryptocurrency exchange suspending withdrawals from their platform. People are asking the question whether or not Binance got hacked.
Here’s what is known about the situation so far:
There is no evidence of the Binance platform itself of being compromised. Customers of Binance are reporting on Reddit that there have been unauthorised market sells of one of their alcoins, then buys of Via Coin Cryptocurrency specifically.
Binance have so far not made any public announcement on their website.
It appears that most of the people effected have enabled the Binance API which allows trading bots, or other external software or services to operate their account programatically. Most often this is done to allow automated bitcoin trading bots to make buy and sell orders.
A handful of people are reporting that they may have enabled the API but were not running a bot, so until that question can be answered it is not clear at the moment whether or not any foul play has occurred. It could be that a computer virus has stolen API credentials from people’s laptops or Binance mobile apps.
The other alternative is that people are the victim of a Pump and Dump. This is where an organised group of traders all buy a cryptocurrency with the intention of selling it when it reaches a specific price. When a lot of people sell at once this forces the price down suddenly, and may trigger algorithmic trading bots to sell any of that coin to limit losses, or take profits – further causing the price to fall.
There are rumours that a few weeks ago the Binance database was restored following a database corruption. Some customers are theorising that the database was compromised on that date, and we are now seeing the results of that hack taking place.
According to Coinmarketcap, Viacoin (VIA) has a market cap of $82,386,112 USD and the volume in the past 24 hours is a huge $191,756,000 USD. Yesterday the volume was just $704,171 meaning that the activity today has been very unusual to say the least.
The incident appears to have effected the price of other cryptocurrencies with bitcoin and other cryptos all taking a nosedive in price this afternoon due to the psychological effect of FUD (fear, uncertainty, and doubt). Some savvy investors will take the opportunity to snap up some bitcoin while the price is low.
If you know anything else please share it with other readers in the reply section below.