Coinbase after Binance hack: 99% of customer balances are offline

After the historic hack at Binance, Coinbase is trying to reassure customers. The American stock exchange says that more than 99 percent of all customer balances are now in cold storage. This means that the vast majority of crypto is stored offline, out of the direct reach of hackers.

Coinbase emphasizes that it was not hit by the Binance hack and says customer balances are fully covered. The exchange holds only a small part of the crypto in so-called hot wallets, so that customers can quickly withdraw or carry out transactions.

Most of it stays in cold wallets. These wallets are not continuously connected to the internet and are therefore much more difficult to attack from the outside.

Coinbase also uses several additional layers of security. Private keys, the keys to access the wallets, are broken down so that one person or one hacked computer is not enough to move money. There are also limits on how much crypto can be sent from cold storage in a short period of time.

Moreover, when unusual activity is detected, Coinbase can immediately stop transactions. In some cases, the keys used to sign transactions are taken completely offline until it is clear what is going on.

The explanation comes shortly after the attack on Binance, in which about 6.3 billion dollars of crypto was stolen. According to Binance, hackers used a fake job interview and internal systems to gain access.

Precisely that incident shows that not only wallets themselves are vulnerable. Employees, laptops and internal software can also form a gateway.

Coinbase therefore says it pays a lot of attention to phishing and employee access. Sensitive actions require multiple approvals and one stolen password or device should not be enough to move funds.

The fair also warns that artificial intelligence is rapidly changing the security landscape. AI can help attackers create more persuasive phishing attacks and find vulnerabilities faster. Changpeng Zhao, the founder of Binance, issued the same warning earlier this week.

Coinbase therefore states that it continues to invest in new security techniques. The message after the Binance hack is clear: the less crypto is continuously online, the smaller the amount that is immediately within reach in a successful attack.