Binance co-founder CZ warns banks face greater AI cyberattack risks than crypto exchanges

Changpeng Zhao, co-founder of Binance and often referred to as CZ, has raised concerns about the potential for artificial intelligence (AI) to increase the frequency of cyberattacks in the financial sector. This warning follows a significant security breach that caused losses of approximately $6.3 billion for the cryptocurrency exchange.

In a recent interview with Yahoo Finance Executive Editor Brian Sozzi, Zhao noted that the advancement of AI tools is empowering hackers to better analyse software and uncover vulnerabilities that may have been tough for humans to spot in the past. This heightened capability poses a serious challenge for companies striving to safeguard their systems against increasingly sophisticated threats.

“There’s no 100% security,” Zhao said, noting that the possibility of an attack exists for every crypto platform, wallet service, bank, and financial institution. He added that AI is improving the ability of attackers to find security gaps, while defensive systems have not advanced at the same pace.

“AI is just making hacking so much easier now, and the AI so far has not made defence a lot easier,” he said.

According to Zhao, AI can now analyse code and search for bugs more comprehensively than human security teams could previously manage. He believes the global financial system must catch up by using the same technology to strengthen its defences.

“The whole global financial system needs to catch up on the AI defence, and we have to use AI as well,” he said.

CZ reiterates that Binance users will not bear the losses

Zhao’s recent comments come just days after Binance faced a significant security breach that resulted in unauthorised withdrawals from its hot wallets. The exchange estimates this event led to losses of around $6.3 billion, marking it as one of the largest thefts in cryptocurrency history.

In a statement on October 30, Binance indicated that its initial investigation suggested a potential compromise of a DevOps engineer’s laptop. This incident may have enabled an attacker to access a service container and execute unauthorised withdrawal transactions. As the investigation continued, additional vulnerabilities were identified.

Binance said it had found no evidence that wallet private keys were compromised. The exchange assured users that the losses would be covered through its Secure Asset Fund for Users (SAFU) and corporate reserves.

To this end, the exchange has set aside over $6.34 billion to address the impacted assets and is actively collaborating with law enforcement and blockchain partners to trace and freeze the stolen funds. According to their update, roughly $3 billion has already been frozen on-chain.

During the interview, Zhao mentioned that withdrawals have been reinstated and that the platform is functioning normally. He emphasised that users would not incur any losses since the company is committed to covering the financial impact.

Although Zhao is no longer managing Binance, he kept a close eye on the unfolding situation and used his public platform to reassure users about the safety of their funds. He also highlighted that the exchange followed its established response plan, which included containing the breach and ensuring users remained informed throughout the process.

AI is changing the cybersecurity threat

Zhao sees the Binance incident as a warning that even major financial platforms can’t take their security for granted. He emphasised that as technology advances, the risk of cyberattacks grows, especially as hackers acquire better tools to find flaws in complex software.

His comments urge banks and financial institutions to enhance their cybersecurity strategies rather than just relying on traditional protections. To stay ahead of threats, these institutions may need to adopt advanced tools to spot vulnerabilities and monitor suspicious activities.

Zhao pointed out that this issue isn’t just a concern for cryptocurrency companies; banks and the broader financial system share the same risks. The incident has also raised concerns about the security of centralised cryptocurrency exchanges, which hold significant customer assets and depend on digital systems for transactions and withdrawals.

Although Binance has committed to covering the losses, the breach underscores the financial and reputational damage that can occur from a successful attack, even if customers ultimately remain safe.

Read as well: Binance co-founder CZ talks going to prison and the cost of moving first in new memoir