Binance freezes withdrawals after $6.3 billion crypto hack

Binance suspended all customer withdrawals following a security breach that the company estimates cost it roughly $6.3 billion. The pause in services occurred after the world’s largest cryptocurrency exchange confirmed it was the target of what appears to be the biggest heist in the sector's history.

The exchange stated that approximately $3 billion of the affected assets, primarily stablecoins used as a cash equivalent in the crypto market, have been frozen. However, Elliptic, a blockchain analytics firm, reported that the attackers had already converted about $3.3 billion into digital assets that cannot be frozen. Elliptic added that the attackers are currently working to turn those assets into traditional currency.

Binance said an initial investigation indicated that hackers compromised an engineer's laptop to access funds on the platform. On Friday morning, the company announced that further review had revealed additional points of breach. The firm is coordinating with law enforcement agencies to trace the movement of the stolen funds.

TRM Labs, another blockchain intelligence firm, linked the incident to a North Korean hacking unit known as TraderTraitor. The firm stated that the scale of the theft makes it the largest crypto theft on record. This follows a similar attack on the Bybit exchange last year, in which North Korean hackers stole cryptocurrency worth $1.5 billion.

Peter Ward of the Sejong Institute in Seoul noted that North Korea possesses considerable technical expertise and provides near-total protection to its hackers. Ward warned that the situation may deteriorate further in the coming period. He said, "Things may get a lot worse going forward."

To manage the financial impact, Binance announced it had reserved over $6.34 billion of its own company funds to cover the incident. Of that total, $5 billion is already held in the specific token assets that were targeted. The company is actively purchasing additional tokens to cover the remaining balance, noting that the process may take time due to low liquidity in certain markets and standard settlement delays.

The incident strikes Binance at a time of financial vulnerability for the platform, which was co-founded by Changpeng Zhao in 2017. The exchange currently holds about $140 billion in digital assets. In 2023, the company pleaded guilty to US criminal charges related to anti-money laundering violations and paid a fine of $4.3 billion.