(WiBinance, the world’s largest cryptocurrency exchange, recorded net outflows of $3.6 billion after restoring customer withdrawals on Sunday, following a massive $6.3 billion cyber theft attributed by the FBI and blockchain analytics firms to North Korean hackers. However, the withdrawals have so far failed to trigger a wider exodus from the platform, which continues to command a significant lead over its rivals.
The exchange said the movement of funds eased after an initial surge in withdrawals. Binance had temporarily suspended withdrawals following Thursday’s hack to investigate the incident and stabilise its systems. It also pledged to reimburse customers in full, saying users would not bear the financial losses.
Despite the scale of the breach, several factors appear to have helped Binance retain customer confidence: its rapid response, regular public updates, commitment to cover the stolen funds and its enormous market presence.
Quick answers to key questions
Binance said it would bear the financial impact and would not pass the losses on to customers. The exchange reported replacing about 95% of the stolen cryptocurrency.
Customers withdrew funds after Binance reopened withdrawals, but the total also included transfers between Binance’s own wallets. The exchange said the initial withdrawal surge later eased.
Binance resumed withdrawals in phases after temporarily suspending them to investigate the breach and stabilise its systems. The first phase included 15 tokens, followed by withdrawals across 15 blockchain networks.
The FBI attributed the theft to TraderTraitor, a North Korean state-sponsored cyber unit. Blockchain analytics firms also linked the attack to the group.
Binance said it used funds from its corporate treasury, emergency reserves and insurance funds to purchase replacement tokens. It reported covering about 95% of the stolen assets.
The exchange reported $171 billion in assets under management as of October 28, according to a post on its social media account. By comparison, rival exchange OKX had approximately $29 billion, highlighting the gap between Binance and its closest competitor.
Why Binance customers aren’t abandoning the exchange
Binance’s response to the hack appears to have played an important role in containing the immediate fallout. The company moved quickly to suspend withdrawals, investigate the breach and coordinate with industry partners and US government agencies.
Several experts have praised the speed of its response and the frequency of public updates intended to reassure customers.
Haseeb Qureshi, managing partner at venture fund Dragonfly, said the incident reflected how much the cryptocurrency industry had matured.
“On some level, this shows how much the industry has matured,” Qureshi said. “We saw extraordinarily quick responses.”
Binance also committed to absorbing the financial impact of the stolen funds rather than passing the losses on to customers. The it using its corporate treasury, emergency reserves and insurance funds.
“Our commitment remains unchanged: Binance will bear the financial impact of the stolen funds,” the company said. “These losses will not be passed on to users.”
The company’s scale is another factor. With $171 billion in assets under management, Binance remains substantially larger than other cryptocurrency exchanges. Its size and reach make it difficult for some traders and institutions to shift their operations elsewhere immediately.
Binance gradually restores withdrawals
Binance resumed withdrawals in phases on Sunday after freezing the service in the immediate aftermath of the hack.
The first phase covered 15 tokens, including Ether and the two largest stablecoins, Tether’s USDT and Circle Internet Group’s USDC. Withdrawals across 15 blockchain networks, including Ethereum, BNB Smart Chain, XRP and Base, followed.
However, not all the reported outflows represented customers moving their money off the platform. Binance Co-CEO Yi He said some transfers were movements between the exchange’s own wallets.
The $3.6 billion net outflow therefore needs to be viewed in the context of both customer activity and internal fund movements. Binance said the initial spike in withdrawals had eased.
How much did Binance lose in the $6.3 billion hack?
The cyber theft involved approximately $6.3 billion in cryptocurrency spread across 10 blockchains, including Bitcoin and Ethereum.
The breach reportedly involved an employee’s compromised laptop, raising questions about the exchange’s internal cybersecurity safeguards. The FBI and blockchain analytics firms have attributed the attack to North Korea-linked hackers.
US government entities, including the FBI and the US Secret Service, have been investigating the incident.
Has the Binance hack affected the wider crypto market?
The immediate impact on cryptocurrency prices has so far appeared relatively contained. Most major cryptocurrencies changed by less than 1% on Sunday.
Bitcoin, which accounts for around 60% of the cryptocurrency market’s total value, was trading at approximately $78,000, about 5% below its level before the theft.
However, the incident has renewed concerns about the security of digital assets and the risks of relying on centralised cryptocurrency exchanges.
The attack also follows a series of security incidents involving crypto and financial services companies. Hundreds of millions of dollars were drained from Bitget in September. Hackers also stole more than $100 million in Bitcoin from wallets secured by Coinkite devices, while tampering involving Ledger devices resulted in losses worth millions of dollars.
Other recent cyberattacks have affected prediction market Polymarket, South Korean financial firms Mirae Asset Global Investments and Daishin Securities, and Japanese currency trading platform GMO Internet Group.
Some security experts have also raised concerns that artificial intelligence tools could make cyberattacks more effective, particularly by helping hackers with reconnaissance and social engineering. North Korean hackers are believed by some experts to be incorporating AI tools into their operations, although there is no confirmation that AI was used in the Binance breach.
Will institutional traders move away from Binance?
The hack has prompted some trading firms to reconsider how much capital they keep on the exchange, although not all are planning to stop using the platform.
Quantitative trading firm SQS Trading had approximately a quarter of its trading capital on Binance. Its founder, Eli Williams, said the firm planned to reduce that allocation by roughly a third.
However, the move would not involve closing its positions or reducing its use of Binance as a venue for hedging.
Williams said the firm would monitor capital outflows and trading volumes compared with other major exchanges before assessing the longer-term impact.
Others have indicated that they do not intend to move away from Binance.
Justin d’Anethan, head of research at private markets advisory firm Arctic Digital, said he was not fazed by the hack and would continue using the exchange.
“When something seems fishy, it’s good to act fast, but when something catastrophic happens, it’s better to hold off doing anything,” he said. “I haven’t and wouldn’t move away from Binance.”
(With Bloomberg inputs)
