Binance Hacked: CFTC Chair Says Blockchain Gives ‘A Very Good Shot’ At Tracing Stolen Funds

• Selig said the blockchain could give investigators more ability to track stolen funds than they would have in a conventional bank robbery.
• He acknowledged that hackers could use mixing services such as Tornado Cash to make funds harder to trace, but said blockchain records can still help investigators follow the money.
• He said the CFTC wants to offer exchanges a route to register federally and become subject to cybersecurity safeguards.

Commodity Futures Trading Commission (CFTC) Chairman Michael Selig said on Friday that the public record of blockchain transactions gives investigators a strong chance of tracing the funds stolen in the Binance hack.

“I do believe that the blockchain gives us a very good shot,” Selig said in an interview on CNBC. His comments come after Binance, the world’s largest crypto exchange, was hacked on Thursday night, with losses amounting to around $6.34 billion. 

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Selig said the blockchain’s transaction history could help investigators follow the stolen funds, even if the attackers moved them through services designed to obscure their origins. “But I do believe the blockchain gives us a lot more ability to track this sort of stuff than, for example, if we had a bank robbery,” he said.

Selig added that the CFTC would work with law enforcement to assist with the investigation.

Binance Hack Renews CFTC Push For Crypto Oversight

Selig said the breach reinforced the CFTC’s case for bringing crypto trading venues under federal oversight, particularly offshore exchanges that operate without the safeguards required in U.S. financial markets.

“Well, this proves our exact point in proposing regulations for crypto markets earlier this month,” he said. “The real issue here is that these are unregulated offshore exchanges, and they don’t have the same sorts of safeguards that we have in our financial markets here in the U.S.”

Selig said the agency wants to offer exchanges a path to register with the CFTC, which would subject them to cybersecurity requirements similar to those in U.S. financial markets.

“We want to offer a federal option to these exchanges to come and register with the CFTC, and they would be subject to the same sorts of cybersecurity safeguards that we have in our markets today,” he said.

Blockchain Records Could Help Trace Stolen Funds

Selig said the attack on Binance targeted systems surrounding the blockchain rather than the blockchain itself. However, he noted that stolen cryptocurrency can move quickly and that attackers may use mixing services such as Tornado Cash, which pools transactions to make the origin of funds harder to trace.

Selig said that even when such services are used, the blockchain’s transaction history can give investigators a way to follow the money. He added that the CFTC would assist law enforcement with the investigation.

“I’ve heard some allegations and rumors as to where it could have gone. So we’re of course going to work with law enforcement to assist however we can,” he said.

Bitcoin, BNB Slide After Binance Hack

The crypto market has been in a tailspin since news of the hack broke, with Bitcoin (BTC), Ethereum (ETH) and Binance Coin (BNB) hitting over one-month lows. Both BNB and BTC were among the top trending crypto tickers on Stocktwits at the time of writing.

BNB’s price fell over 6% in the last 24 hours, leading losses among the top 10 cryptocurrencies by market capitalization. However, retail sentiment on Stocktwits around BNB improved to ‘bullish’ from ‘neutral’ territory over the past day while chatter rose to ‘high’ from ‘normal’ levels. 

Meanwhile, Bitcoin’s price dropped as much as 4.5% to around $77,500, recuperating from a drop to around $76,400, with no change in retail sentiment, still stuck in the ‘bearish’ zone. 

The overall cryptocurrency market shed as much as 5% in the last 24 hours, with its valuation dropping to $2.69 trillion. CoinGlass data showed $1.65 billion in crypto liquidations, with $1.45 billion coming from long positions that were forced to unwind.

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