Binance's possible hack triggers $3 billion freeze in crypto assets

Binance, the largest cryptocurrency exchange globally, froze $3 billion worth of crypto assets on Thursday following a potential security breach. Stablecoin issuers Circle and Tether also froze related assets. Binance co-founder Yi He stated the company will cover all hacking losses, though details about the incident remain unclear.

The hacking, potentially the largest in crypto history, impacted markets immediately on Friday in early Asian trading. Bitcoin and ether both dropped around 2% to six-week and two-month lows, respectively, while Binance's native token BNB saw an 8% decline. Coinbase Global and Strategy MSTR also saw a 4.8% and 6% drop, respectively, in extended trading.

Binance would increase the frozen amount as it worked with law enforcement and industry partners to trace and freeze additional assets. Co-founder Changpeng Zhao confirmed the incident as a hack, highlighting how AI vulnerabilities make it difficult to prevent such breaches. Binance runs a secure asset fund to protect users in case of security breaches, but the growing risk of AI-assisted hacking may push users towards larger exchanges, according to Trace Finance CEO Bernardo Brites.

Tether and Circle froze nearly $1.57 billion and over $800 million, respectively, in assets related to the incident. Binance is conducting security checks and will resume withdrawals once the issue is resolved, while user funds remain safe. The exchange temporarily suspended trading on its Binance Alpha platform as a precaution.

Other firms, such as World Liberty Financial and Ripple, also froze funds linked to the potential hack, highlighting the string of crypto thefts in recent years.