Binance sets aside $6.34B to cover record hack losses

Binance said on Friday it has set aside more than $6.34 billion of its own money to restore customer balances after the largest cryptocurrency theft on record. About $5 billion of that is already held in the same tokens the attackers stole, the exchange told CoinDesk. The goal is to replace user holdings one-for-one rather than pay them back in cash. Binance is buying the rest on public markets and through over-the-counter (OTC) trades. It warned that purchases of low-liquidity tokens, and the time OTC deals take to settle, could slow the process, according to Cointelegraph's live coverage.coindesk.com+1

The reserve does not include roughly $3 billion in stolen assets that industry partners have frozen. "These figures do not include frozen or protected assets," a Binance spokesperson said. The spokesperson added that the company will "continue to use company resources to cover confirmed shortfall" and that "we will weather this storm".coindesk.com

Verifying the reserves

Binance would not share wallet addresses for the $5 billion, citing security. It said the holdings will appear in its next proof-of-reserves report, and it has not said which tokens it still needs to buy or when the purchases will be finished. Security firm CertiK said it needs more information to check the claim on-chain. Earlier on Friday, CertiK CEO Ronghui Gu estimated that the frozen assets plus Binance's $1.17 billion emergency fund would cover about 66% of the losses. That would leave a gap of about $2.1 billion, around 1.3% of the exchange's $165 billion in reserves. Founder Changpeng Zhao said Binance's SpaceX stake alone is worth more than $1 billion. Co-founder Yi He said this year's revenue is enough to cover the losses without selling it.cointelegraph.com

How the heist unfolded

On Thursday, October 29, attackers drained about $6.3 billion from Binance's hot wallets across 10 blockchains, most of it in roughly 20 minutes. The stolen funds included Bitcoin, Ether and the stablecoins USDT Tether and USDC USD Coin. Binance first blamed a DevOps engineer's compromised laptop. It later said it had "uncovered additional points of breach" in what it called "a complex attack". TRM Labs and Chainalysis linked the attack with high confidence to North Korea's TraderTraitor group, though Binance has not named who was responsible.africa.businessinsider.com+2

Tether, Circle, Ripple and World Liberty Financial froze about half of the stolen assets, most of them stablecoins. TRM estimated that about $2.4 billion in Bitcoin and Ether is out of reach.fidelity.com

Markets and withdrawals

Bitcoin and Ether fell after the news, and Binance's BNB ↗ 0.14% token dropped more than 6%. Thinly traded tokens took bigger hits; the FUN token crashed 90% early Friday, which shows how hard it may be for Binance to buy back the smaller tokens. Deposits are working normally. Withdrawals are still paused, and Yi He said they should resume by Sunday.news.bloomberglaw.com+2