- The US Federal Reserve and OCC have reportedly contacted banks following a $6.34 billion security incident involving Binance.
- Regulators are checking for unusual activity and possible disruptions linked to the incident.
- Cybersecurity experts warn that hackers can exploit employees, software and trusted systems to steal funds without directly breaking encryption.
US Regulators Reach Out To Banks
US financial regulators have reached out to banks after a huge cyber-attack hit cryptocurrency exchange Binance, impacting around $6.34 billion worth of digital assets. Officials from the Federal Reserve and the Office of the Comptroller of the Currency (OCC) began reaching out to banks on Monday asking questions about unusual activity and service disruption, Reuters reported on Thursday.
This shows that regulators are keen to understand whether there would be any impact on traditional financial institutions. Banks may now come under increased scrutiny as regards to how they are managing risks associated with crypto, such as digital asset storage, risk exposure to other financial companies, and how they would respond to any cyber threats.
Several banks have been conducting internal reviews into the Binance incident, to see if they are vulnerable to similar attacks, Reuters reported. Within hours of the incident occurring, a team of cyber experts from one of the largest banks in the US reached out to Binance.
The exchange confirmed it had provided its public incident report to all banking partners. It added that it was unaware of any vulnerabilities in the systems of its partners.
Experts believe this is standard practice when dealing with a large-scale cyber incident. “Regulators will want to know the potential risks and how quickly banks can react to cyber threats,” said Stefan Muehlbauer, head of US government affairs at CertiK.
While these questions may not show a lack of support for crypto, they show a requirement to ensure that financial institutions are well-prepared for new cyber threats.
Details Of Binance Cyber-attack
Approximately $6.34 billion of digital assets were impacted in the attack on October 29, according to Binance’s incident report published on November 3. Of this amount, the exchange said it had frozen or blocked $2.85 billion.
Binance explained that the attack was due to compromised software installed by an engineer in June. The hackers then exploited social engineering tactics, stolen credentials and malicious software to access wallet systems.
Cyber experts have said that similar tactics could have been used against traditional banks, particularly those providing crypto custody and payments services. Hackers could have attacked staff devices, accounts or third-party services. Binance said it has improved its security measures and has independent cybersecurity experts looking into the incident.
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