Richard

Anvil

Editor's note: Binance said late Thursday that around $3 billion in assets linked to the incident has now been frozen. The exchange said user funds are safe, but it has not confirmed the total amount stolen. The frozen assets are separate from estimates of the theft and should not be read as the total loss.
Binance, the world’s largest exchange, said Thursday it has not confirmed any impact to user funds as it investigates reports of a potential security issue.
Former Binance chief Changpeng Zhao and <a href="https://www.panews.io/articles/h2vcpwdo" rel="noopener noreferrer nofollow">majority shareholder</a> in the company said funds are safe, while saying it looks like a hack.
Binance posted on <a href="https://x.com/binance/status/2115915708504900039" rel="noopener noreferrer nofollow">X</a> on Oct. 29. "Our teams are aware of reports of a potential security issue and are actively investigating," the exchange wrote. "At this stage, we have not confirmed any impact to user funds."
It said its security teams are reviewing the information "with urgency" and will post updates through official Binance channels.
It also warned users not to trust unofficial links or requests for account information.
<a href="https://www.thestreet.com/crypto/markets/binance-ceo-warns-latecomers-will-pay-a-premium" rel="noopener noreferrer nofollow">Related: Binance CEO warns latecomers "will pay a premium"</a>
<h2 id="binance-s-scale-and-zhao-s-role">Binance's scale and Zhao's role</h2>
Binance is a cryptocurrency exchange, a website and app where people buy, sell and store cryptocurrencies.
According to <a href="https://www.binance.com/en" rel="noopener noreferrer nofollow">its website</a>, it has over 320 million registered users in over 180 countries. In its <a href="https://www.binance.com/en/blog/ecosystem/binances-2024-endofyear-report-wrapping-a-transformative-year-quarter-of-a-billion-users-strong-7581605994538648935" rel="noopener noreferrer nofollow">2024 year-end report</a>, the company said assets held on the platform for customers exceeded $160 billion. It said the total value traded over its history passed $100 trillion.
Zhao <a href="https://www.binance.com/en/square/post/344659812517138" rel="noopener noreferrer nofollow">founded Binance in 2017</a>. He no longer manages the exchange and identifies himself as a shareholder in his post. He has said he remains a <a href="https://www.panews.io/articles/h2vcpwdo" rel="noopener noreferrer nofollow">major shareholder</a> of Binance, and U.S. court filings have called him its <a href="https://storage.courtlistener.com/recap/gov.uscourts.wawd.328570/gov.uscourts.wawd.328570.2.0.pdf" rel="noopener noreferrer nofollow">majority owner</a>.
<h2 id="cz-says-funds-are-safe">CZ says funds are safe</h2>
Zhao posted his own statement on <a href="https://x.com/cz_binance/status/2115915423174853077" rel="noopener noreferrer nofollow">X</a> the same day. "User funds are safe!" he wrote.
"It does look like a hack on Binance," he wrote. "Appreciate the quick freeze from Tether (~$971m) and Circle (~$823m)."
USDT and USDC are stablecoins, digital tokens designed to be worth one U.S. dollar each. Their issuers, Tether and Circle, can freeze tokens, which blocks them from being moved.
Separately, one analyst gave a larger estimate of what may have been taken. Justin Kalland, a blockchain protocol engineer and smart contract auditor, <a href="https://x.com/justinkalland/status/2115913597591421375" rel="noopener noreferrer nofollow">reported on X</a> that more than $2.5 billion in USDT, ETH and 62 other tokens was drained from a Binance hot wallet. He said a wallet tied to the transactions was funded through Tornado Cash, a service that hides where crypto money comes from, which led him to believe it was a hack. Binance has not confirmed his estimate.
<figure>
 <figcaption>
 Tether CEO Paolo Ardoino reported more than $1.567 billion in USDT frozen; CZ reported about $823 million in USDC frozen. The graphic shows those reported freezes, not a confirmed theft total.&nbsp;
 </figcaption>
</figure>
Tether's chief executive, Paolo Ardoino, later <a href="https://x.com/paoloardoino/status/2115918000373346709" rel="noopener noreferrer nofollow">said on X</a> that Tether froze more than $1.567 billion in USDT related to the potential hack. Freezing blocks tokens from being moved; it is not the same as money being stolen.
Zhao, known as CZ, said he no longer manages Binance.com. "I don't manage Binance (.com) anymore, but as a shareholder, I expect all user funds will be fully covered," he wrote.
Binance called the matter a potential security issue and said it has not confirmed any user fund impact. Zhao said it looks like a hack and that user funds are safe.
<a href="https://www.thestreet.com/crypto/markets/binance-ceo-richard-teng-discusses-czs-upcoming-release" rel="noopener noreferrer nofollow">Related: Binance CEO Richard Teng discusses CZ's upcoming release</a>
<h2 id="what-protects-user-funds">What protects user funds</h2>
The first protection is the freeze. Tether froze more than $1.567 billion in USDT, its chief executive said, and Circle froze about $823 million in USDC, according to Zhao. Frozen tokens cannot be moved or sold by anyone, including the person holding them.
Binance also has an emergency fund for users, called SAFU. When hackers took 7,000 bitcoin from Binance in 2019, the exchange used that fund to cover the loss and said customers were not affected. Zhao said he expects user funds to be fully covered this time as well.
These protections are not a guarantee. Binance has not confirmed any impact to user funds and has not said how much was taken.
<h3 id="trending-on-thestreet-roundtable">Trending on TheStreet Roundtable:</h3>
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<h2 id="how-binance-handled-past-hacks">How Binance handled past hacks</h2>
In May 2019, hackers withdrew 7,000 bitcoin, then worth about $41 million, <a href="https://www.reuters.com/article/us-crypto-currency-cyber-binance/hackers-steal-41-million-worth-of-bitcoin-from-binance-cryptocurrency-exchange-idUSKCN1SE0FK/" rel="noopener noreferrer nofollow">Reuters</a> reported. Binance said the bitcoin came out of its hot wallet, an online wallet connected to the internet that an exchange uses for everyday withdrawals. Funds kept offline are known as cold storage.
<figure>
 <figcaption>
 What is a hot wallet? Explained (5:26)
 </figcaption>
</figure>
The exchange said then that user funds would not be affected. It said it would use its secure asset fund for users, known as SAFU, to cover the loss. Binance's own <a href="https://www.binance.com/en/support/announcement/binance-security-breach-update-360028031711" rel="noopener noreferrer nofollow">breach notice</a> gives the details.
In October 2022, a hacker took about $570 million of BNB from a bridge on BNB Chain, <a href="https://www.reuters.com/technology/hackers-steal-around-100-million-cryptocurrency-binance-linked-blockchain-2022-10-07/" rel="noopener noreferrer nofollow">Reuters</a> reported. A Binance spokesperson said about $100 million was unrecovered.
The 2022 case involved a blockchain bridge, not an exchange wallet.
<h2 id="bitcoin-price-and-liquidations">Bitcoin price and liquidations</h2>
Bitcoin traded at about $79,345 as of 5:42 p.m. ET, down about 1.9% over the previous four hours, according to <a href="https://www.coinglass.com/" rel="noopener noreferrer nofollow">CoinGlass</a>.
About $985 million in trading positions were liquidated across the crypto market in the past 24 hours, up 281% from the day before, <a href="https://www.coinglass.com/liquidations" rel="noopener noreferrer nofollow">CoinGlass liquidation data</a> show. A liquidation is when a trader's borrowed bet is forcibly closed because the price moved against it. Bitcoin contracts made up the largest share, at about $290 million. The figures cover the whole crypto market, not only Binance.
The numbers in this story are preliminary and could change as Binance and outside investigators release more findings, including any post-mortem report.

Binance major shareholder says user funds are safe after $3B hack

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