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Binance Not Responsible for User $1M Loss, Co-Founder Yi He Says

Key Takeaways

  • Yi He, Binance co-founder, denies that the platform's security issues led to a user's $1M loss, attributing it to the user's device being hacked;
  • The victim, Nakamao, claims the hacker manipulated his account by controlling web cookies;
  • Binance quickly froze the compromised account but stated that they couldn't compensate for losses.
Binance Not Responsible for User $1M Loss, Co-Founder Yi He Says

Yi He, co-founder of the crypto exchange Binance, has rejected allegations that a security flaw on their platform led to a user losing $1 million.

On June 3, Yi He clarified the situation by stating:

"Look closely, this user's computer was hacked, and it's really hard to save him. The hacker could not withdraw funds, so he sold the victim's coins, making him lose all the money."

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The controversy started when crypto trader Nakamao reported losing his entire account balance, accusing unknown entities of "counter-trading" without accessing his Binance password or two-factor authentication (2FA) details.

Nakamao said:

<A> security company told me that the hacker was manipulating my account by holding my web cookies hostage. The hacker bought the corresponding tokens in the USDT trading pair with abundant liquidity, and placed limit sell orders exceeding the market price in the BTC, USDC and other trading pairs with scarce liquidity. 

Nakamao described how the hacker placed numerous leveraged bets, leading to nearly $1 million in losses when the trades failed. He noted that during the entire incident, he did not receive any security warnings from Binance.

Binance's customer service team responded, informing the victim that the hacker used a plug-in to steal their account login details and impersonate them to conduct operations and transactions.

Binance claimed that they processed Nakamao's request to freeze his account within "1 minute and 19 seconds" of receiving it. However, the hacker had already conducted several leveraged trades by then.

Binance's official response stated:

We sympathize with your experience, but according to the information we have learned so far, the reason for your asset loss is that your related devices were manipulated because of the installation of malicious plug-ins. Unfortunately, we have no way to compensate for such cases that have nothing to do with Binance.

Nakamao disagreed with Binance's conclusion, asserting that the platform had known about the plug-in long before his account was breached. The victim alleged:

It turns out that Binance knew about the existence of this plug-in a long time ago and even encouraged the KOL and the hacker to obtain more information. My information was stolen when the plugin was further promoted. Binance tracked down the hacker's address at least 3 or 4 weeks ago and also obtained the name and link of the plugin from the KOL.

Nonetheless, as the co-founder emphasized, Binance can't be held responsible for losses resulting from hacked user devices.

In other news, crypto investigator ZachXBT has recently connected the team behind the memecoin CAT to a hack of crypto investor GCRClassic's X account, accusing them of sniping and executing pump-and-dump schemes.

Aaron S., Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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