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Binance has developed an anti-fraud system to identify stolen funds.
According to Binance CEO Changpeng Zhao (CZ), the new system will track the stolen funds as they travel through blockchains. It will also provide this data to other, smaller exchanges, so they can prevent the spread of illegitimately gained coins.
CZ said this shows the industry is, “decentralized, but united.”
Typically exchanges can stop funds if they are notified that a hack has taken place and are given a list of addresses that the stolen funds originated from or have passed through. But, exchanges still need to trawl through the blockchain to find out if the funds arriving on their system have come from a blacklisted address. And this is a particular burden for smaller exchanges that don’t have the technical capabilities or manpower.
In this case, the new system will provide updated information that smaller exchanges can use—so they can also stop the flow of illegal funds. He added that victims of hacks will still need to report hacks as fast as they can, to make the most of the new system.
The anti-fraud system was announced in response to the hack of Singapore-based exchange Bitrue, which lost 9.3 million XRP and 2.5 million Cardano (ADA), worth $4.7 million. Earlier this month, crypto wallet GateHub also suffered a security breach, which saw the theft of 23 million XRP ($9.2 million), of which 500,000 XRP ($200,000) was recovered.
On social media, many users tweeted in favor of Binance’s move to maintain the integrity of the market, with some calling it a great initiative. Others, however, have been quick to point out that this kind of system may get abused by governments wishing to blacklist certain individuals.
One user even said that he wished this was around a few years ago when he was hacked and his funds were traced back to Bitstamp. Better late than never, I suppose.