Containing the Binance hack hinges on vow to make traders whole
Binance may be able to emerge from cryptocurrency's biggest ever cyber exploit relatively unscathed.
The US$6.3 billion crypto heist that occurred on October 29 at Binance, the world's largest cryptocurrency exchange, was unprecedented in scale. Nick Smart, an employee at Crystal Intelligence, described the magnitude of the breach, stating that it is "huge in terms of magnitude." Binance promptly suspended withdrawals following the discovery of the exploit and pledged to compensate any losses.
As of October 30, roughly US$3 billion of the stolen assets had already been frozen across various blockchain networks. Despite the severity of the hack, the cryptocurrency market has responded with relative calm. Bitcoin, the market bellwether, only saw a modest 3.1% drop to below US$77,000. Certain dollar-linked stablecoins also experienced slight fluctuations but did not cause significant concern.
Analysts from TRM Labs and Chainalysis have attributed the hack to North Korea, a group that has been linked to numerous crypto-related breaches in recent years. Binance CEO Changpeng Zhao has set aside over US$6.34 billion to cover the incident, which includes a reserve of roughly US$3 billion frozen by third parties, such as stablecoin issuers Tether and Circle Internet Group.
The company has also established the Secure Asset Fund For Users to protect customers in extreme situations, typically maintained at about US$1 billion. While many in the cryptocurrency market are confident that Binance will make good on its pledge to reimburse traders, the ultimate test will come on November 1 when withdrawals are scheduled to resume.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
