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Selig pointed to the roughly $6.4 billion theft and pitched a federal registration option for offshore venues under CFTC standards.
CFTC oversight drew a fresh push on Friday as CFTC Chairman Michael Selig told CNBC the record Binance hack — roughly $6.4 billion — “proves our exact point” for crypto-market rules proposed earlier this month, the report says.
Chair links Binance breach to registration plan
Selig argued that “these are unregulated offshore exchanges” and said they lack the safeguards common in U.S. markets. He pitched a “federal option” that would let such venues register with the CFTC and submit to the same cybersecurity standards that govern U.S. markets, according to his remarks cited by the report.
He also sought to separate the exploit from blockchain design, saying it did not break Ethereum or its smart contracts but stemmed from a vulnerability introduced via a laptop. He added that funds in crypto can move faster than in traditional markets and can be routed through tools like Tornado Cash, while emphasizing that on-chain traceability gives regulators an enforcement advantage.
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Investigation points to signing systems, not blockchains
The report notes that Binance initially pointed to a compromised DevOps engineer’s laptop, but said Friday that its probe had uncovered “additional points of breach.” CEO Richard Teng called it a more complex attack that “did not simply use one engineer’s permissions.”
While the theft did not expose a flaw in Ethereum itself, the attack played out partly on-chain. The report says the attacker used EIP-7702 — which lets ordinary wallets run smart-contract code — to convert a Binance hot wallet into a sweeper with 50 pre-signed authorizations, draining assets. TRM Labs said the broader breach points to a compromise of Binance’s signing infrastructure rather than any blockchain weakness.
The report adds that the Secret Service and FBI have opened a probe. It says TRM Labs and Chainalysis have tied the theft to North Korea’s TraderTraitor group. Binance, for its part, has set aside $6.34 billion to cover losses and told users their assets are safe, according to the report.
Beyond Selig’s CNBC comments, the report says the CFTC has pressed ahead with crypto rulemaking, including proposals sent to the White House that would define event contracts as swaps and float a plan to bring crypto exchanges under federal oversight.
Source: Decrypt.
This article was written with AI assistance and reviewed by an editor.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
The breach at Binance highlights the critical vulnerability of signing systems in blockchain security, suggesting that even robust blockchain protocols like Ethereum can be undermined through compromised infrastructure. Strengthening the security around wallet authorization and pre-signed transactions could be key to preventing similar attacks. This incident underscores the need for enhanced safeguards beyond the blockchain itself, focusing on how signing mechanisms are managed and monitored.
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