Crypto
Binance Sets Aside $6.34B as It Readies Withdrawals
Binance has set aside over $6.34 billion to cover its hack losses and plans a phased restart of withdrawals after finding more breach points. Bitcoin is down about 7.5% in October.
A day after the largest crypto theft on record, Binance has a plan for reopening and a more complicated account of what went wrong. Its second security incident update, signed on Friday, October 30, by co-chief executives Yi He and Richard Teng, said the exchange was targeting a restart of withdrawals about 34 hours later, in phases and only once security checks, remediation and validation of the affected systems were complete; later updates put the restart about 45 hours out, which would land early on Sunday, November 1, UTC. Deposits and unaffected services kept running.
The first explanation, a compromised laptop belonging to a DevOps engineer, now looks like only the entry point. In a video on Friday, Teng described additional points of breach, approval controls that had been bypassed and a self-destruct mechanism that erased the attacker's tools and traces. The security firm Hypernative said the attacker had compromised signing access and produced valid signatures from Binance-controlled keys, using Ethereum's EIP-7702 feature to run its own code through a Binance wallet. That does not contradict Binance's statement that no private key leaked, but it suggests the attacker could make the exchange's own systems sign for it. ZachXBT, Blockaid and TRM Labs said North Korean hackers were the likely culprits.
On the money, Binance said it had reserved more than $6.34 billion of company funds, about $5 billion of it already held in the stolen tokens, covering roughly 80% of the loss; it is buying the rest of the matching USDT, USDC, bitcoin, ether and BNB through the market and over-the-counter desks. About $3 billion has been frozen on chain, and Elliptic independently verified $2.84 billion of freezes as of 8 a.m. UTC on Friday, mostly in the two stablecoins. Arkham counted more than $5.7 billion in wallets linked to the attacker at one point. Binance promised a new proof of reserves with results by Monday, November 2, and a full post-mortem after that.
Traders paid for the uncertainty in leverage. CoinGlass recorded more than $1.6 billion of liquidations in the 24 hours to Friday morning in New York, $1.35 billion of them long positions. On Binance, bitcoin touched $76,325.98 on Friday and closed the UTC day at $77,368.77, 7.5% below its September close with one session of October left. Ether has done worse, at $2,245.54 it was down 16.4% for the month, while BNB, which fell as low as $680 on Thursday night, recovered to $704.42, still 8.4% lower than at the end of September.
The reopening is the moment that matters now. Exchanges that survive hacks usually do so by proving, quickly and in public, that every customer can leave; the risk is that customers then choose to. Binance has done the things that calmed markets after earlier breaches, from pledging to absorb the losses to promising fresh reserve data, and it is a buyer of the very coins it lost while it rebuilds its balances. What its users do in the first hours after withdrawals open, and how fast the queue clears, will say more about confidence than any statement issued while the gates were shut.