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Bitcoin Dips Below $9,500 Briefly, Market Recovers as Binance Hack Refuted

Last Updated March 4, 2021 5:05 PM
Joseph Young
Last Updated March 4, 2021 5:05 PM

Yesterday, on March 8, the price of bitcoin has dropped below $9,500 briefly, triggered by Binance hack rumors, the Japanese government’s issuance of penalty on local exchanges, and the sell-off of a massive amount of bitcoin by the Mt. Gox trustee.

Binance Hack Rumors Refuted

From over $10,600, the price of bitcoin dropped by more than $1,100 within a span of several hours, reaching $9,400. However, almost immediately after the development team of Binance, the world’s largest cryptocurrency exchange, refuted hack rumors and Changpeng Zhao, the CEO at Binance, released a statement regarding the situation, the market recovered.

Within 10 hours, the price of bitcoin declined from $10,600 to $9,400, and rebounded back to $10,000. The entire cryptocurrency market was extremely volatile during this period, as most major cryptocurrencies like Ethereum and Ripple followed the price movement of bitcoin.

In an official statement, the Binance team stated that hackers obtained the account information of users on the Binance platform through phishing attacks throughout February. Then, with the accumulated accounts, the hackers used a false API key to execute trades on behalf of users, triggering one cryptocurrency pair to spike in volume.

“Yesterday, within the aforementioned 2 minute period, the hackers used the API keys, placed a large number of market buys on the VIA/BTC market, pushing the price high, while 31 pre-deposited accounts were there selling VIA at the top. This was an attempt to move the BTC from the phished accounts to the 31 accounts. Withdrawal requests were then attempted from these accounts immediately afterwards,” wrote the Binance team.

Binance has since reversed all trades, and no losses were recorded. Strangely, only the hackers that attempted to take advantage of Binance users had their funds lost, as Changpeng Zhao noted.

Japanese Exchanges

Several analysts have attributed the recent minor correction of the cryptocurrency market to the penalization of Japanese cryptocurrency exchanges for having poor security measures and breaching Anti-Money Laundering (AML) and Know Your Customer (KYC) policies.

Tokyo-based technology reporter Yuji Nakamura revealed that  two small-scale cryptocurrency exchanges have been shut down (FSHO and BitStation), four major trading platforms in GMO, Zaif, Bicrements, and Mr. Exchange were penalized, and two licenses were taken away.

Last month, the South Korean government imposed a penalty on cryptocurrency exchanges with poor security measures, as a part of a larger initiative to allow the cryptocurrency market to evolve and grow within a robust ecosystem, protecting investors.

But, the community has had an outsized reaction towards the crackdown on small cryptocurrency exchanges by the Japanese government.

After the Coincheck $530 million security breach, the Japanese government received many complaints from investors, despite the fact that CoinCheck has decided to refund all users who have lost their funds during the hacking attack.

The recent brief correction was caused by a combination of four factors: Japan’s crackdown on small exchanges, Binance hack rumors, SEC’s announcement to exchanges, and major cryptocurrencies failing to meet key resistance levels.

Featured image from Shutterstock.