Tether, Circle freeze $1.8B after suspected Binance hack

Billions of dollars in crypto left Binance hot wallets on Thursday, Oct. 29, in what founder Changpeng Zhao called a likely hack. Binance has said only that it is investigating. Estimates of the outflow range from about $2.77 billion across five blockchains, according to investingLive, to roughly $3.3 billion on Ethereum, per FinanceFeeds. Stablecoin issuers have since frozen about $1.8 billion of the funds.financefeeds.com+1

Zhao, who stepped down as CEO in 2023, said the exchange "may have been hacked" but that user funds were safe, Bloomberg reported. A Binance spokesperson told Bloomberg the company was "actively investigating" a potential security issue and had "not confirmed any impact to user funds." The spokesperson also warned users to watch for scams.bloomberg.com

What the blockchain shows

At 20:24 UTC (4:24 p.m. EDT), a wallet labeled "Binance 14" sent about 167,500 ETH, 1.615 billion USDT and more than 60 other tokens to a new address in a single transaction worth roughly $2.5 billion, PANews reported. Seventeen minutes later, another 780 million USDC moved from a separate Binance hot wallet to the same address, according to PANews.panews.io+1

The address that triggered the withdrawals had been funded through the mixing service Tornado Cash. Hours before the drain, it also deployed the smart contract that carried out the transfers, which suggests whoever controlled it could sign on behalf of a Binance hot wallet, FinanceFeeds found. The block explorer Etherscan has tagged the addresses "Binance Hot Wallet Exploiter." The receiving wallet quickly sent about 195,000 ETH on to another fresh address, according to BeInCrypto.beincrypto.com+1

Freezes and compensation pledge

In a post on X, Zhao thanked Tether and Circle for freezing about $971 million in USDT and $823 million in USDC USD Coin. He said that although he no longer runs Binance.com, as a shareholder he expects all user funds to be fully covered, TechFlow reported. The freezes left more than $1.1 billion out of reach, including about 700 million USDT that was moved on before the blacklists took effect, plus the ETH, which issuers cannot freeze, FinanceFeeds reported.techflowpost.com+1

Markets slide

Crypto prices fell as the news spread. BNB ↗ 2.27% dropped about 6% within an hour, Bitcoin ↘ 0.78% fell about 2% and Ether Ethereum ↘ 1.68% lost about 3%, CoinDesk reported. Two days earlier, on Oct. 27, Binance had said its security team blocked several cyberattacks linked to North Korea with no loss of assets, according to Odaily. In 2019, Binance used its SAFU emergency fund to cover the theft of more than 7,000 BTC from a hot wallet, CryptoSlate noted. If this breach is confirmed, it would rank among the largest crypto thefts on record, investingLive said.coindesk.com+3