A suspected hack impacting billions of dollars of funds on the Binance crypto exchange spurred emergency asset freezes and sent the price of digital assets tumbling. Executives of the world’s biggest trading venue for the currencies said they were investigating and that customer funds were safe.
“We are aware of reports of a potential security issue and we are actively investigating,” said a Binance spokesperson. “At this stage, we have not confirmed any impact to user funds. Our security teams are reviewing all relevant information with urgency, and we will provide updates through official Binance channels as soon as we have verified information.”
Changpeng Zhao, the co-founder of Binance, said that the world’s largest crypto exchange may have been hacked but that user funds were safe. Zhao, who goes by CZ, no longer runs the company but remains its largest shareholder.
An emergency insurance and reserve fund from Binance called the Secure Asset Fund for Users (SAFU) was established in 2018 to serve a backstop for customers in “extreme situations,” according to the exchange. The SAFU fund is generally maintained at around US$1 billion, but has fluctuated in the past in tandem with market movements, Binance said in 2024.
The two biggest stablecoin issuers said they took steps to freeze their currency on the Binance exchange. Paolo Ardoino, the chief executive officer of Tether, said in an X post that it froze more than US$1.5 billion of the stablecoin, “related to a potential Binance exchange hack”. Jeremy Allaire, who runs Circle Internet Group, said US$800 million of its coin had been frozen amid “reports of a potential exploit involving Binance”.
Bitcoin fell as much as 3.7% – below US$79,000 and its lowest level since September – as the US trading day was wrapping up, with other tokens also selling off. US stocks also ended the session lower, with the Nasdaq 100 tech index dropping nearly 1.4%.
“Hot wallets getting drained is not something new to crypto, but the amount would be a meaningful hack on the largest crypto exchange,” said James Seyffart at Bloomberg Intelligence. “It’s definitely a bad look. And this is one after another,” he said of a recent spate of security incidents.
Already fragile sentiment was hit further amid reports of a potential security breach involving the platform Binance, which, if verified, would add to a bruising run of crypto security incidents. Within recent months, hundreds of millions of dollars were drained from Bitget, while tampering tied to Ledger devices also led to millions of dollars in losses.
Traders had already been bracing for greater volatility in the crypto market this week, with US$11 billion in options set to expire on Oct 30. This comes days ahead of the US midterm elections taking place next week, when Democrats could potentially retake one or both chambers of Congress and open the door to greater regulatory scrutiny for the industry.
Exchange thefts and malfeasance has been an ever-present backdrop of crypto’s almost two-decade ascent and have occasionally provoked protracted bear markets in the currency, the most famous of which was the collapse of Sam Bankman-Fried’s FTX in November 2022. In what remains perhaps the most notorious hacking incident, Japan-based Bitcoin exchange Mt. Gox was struck in 2011. Over time, the hackers made off with tokens worth billions of dollars based on the current market price. Mt. Gox eventually went bankrupt.
“It’s a huge damage to crypto because of the consistent successful hacks in the space,” said Tian Zeng, chief executive officer of crypto hedge fund Third Eye. “The fact that exploits keep happening makes it dangerous in the age of newest AI models being released every two weeks.” BLOOMBERG
