Washington/Berlin. After the unprecedented cyber attack on the world's largest digital currency exchange Binance, platform operations are gradually returning to normal. The company has begun re-enabling customer payouts in an initial phase. At the same time, Binance announced that it had now offset around 95 percent of the stolen funds from its own company reserves - previously there was talk of 90 percent.
In order to restore customer confidence, Binance announced that it would provide an updated proof of reserves this Monday. With this cryptographic process, users can mathematically check whether their individual account balances are actually deposited one-to-one with real holdings in the company wallets.
If the platform's information is confirmed, the largest hacker attack in crypto history in terms of damage amount would end lightly for customers: Since the exchange apparently completely offsets the billions in losses itself, investors were spared direct total losses or forced asset cuts.
In a joint statement with the Secret Service and the IRS-CI tax investigation agency, the FBI warned of the attackers' attempts to conceal the loot. The TraderTraitor actors would exchange stolen holdings primarily into the second largest cryptocurrency Ethereum (ETH).
“It is expected that these assets will subsequently be further laundered through decentralized digital financial services (DeFi) and instant exchanges,” investigators warned. The FBI called on crypto service operators to block transactions “originating from or linked to the addresses that TraderTraitor actors use to launder stolen funds.”
Despite the record damage, the market reacted with comparatively moderate losses: After the attack, the Bitcoin price briefly fell from over $80,000 to around $76,000, but then recovered slightly. Binance co-founder Changpeng Zhao - known in the scene as “CZ” - explained the resilience of the reserve currency on the online platform X: “6.3 billion dollars is the largest value measured in US dollars, but not in Bitcoin,” wrote Zhao. He drew a comparison to the collapse of the Mt. Gox stock exchange in 2014, in which around 650,000 Bitcoin were stolen - at that time more than five percent of the total amount in circulation.
What is decisive for the market impact is not just the pure dollar value, but rather the share of the total amount of the currency, the number of users affected and, above all, the question of who will absorb the losses. Since Binance is bearing the damage from its own resources and protecting customers, there was no systemic shock, wrote “CZ”
What particularly caused a stir in industry circles was the question of how the trading platform was able to almost completely compensate for such a billion-dollar loss in record time. The emergency fund SAFU (“Secure Asset Fund for Users”) advertised by Binance, which serves as a first line of security, only amounts to around one billion dollars and thus mathematically only covers a fraction of the damage.
Experts attribute the fact that the financial hole was able to be closed so quickly to two main factors: On the one hand, partner exchanges and large stablecoin issuers such as Tether and Circle managed to freeze almost half of the loot - around three billion dollars - on the hackers' target wallets within a very short time, so that the immediate need for liquidity fell. On the other hand, after years of market leadership, Binance has huge corporate treasury assets worth several billion dollars.
In order to ensure trust in its own platform at all costs and to avert an existential run on customer funds (“bank run”), the company did not offset the remaining amount through panic purchases on the public stock exchanges, but rather used its own existing holdings and discreet purchases via direct trading channels.
Binance reiterated that leading digital currencies such as Bitcoin, Ethereum, Solana, XRP and important stablecoins were once again 100 percent backed and verifiable via the platform's reserve records. The remaining five percent relate to less liquid digital coins, which take more time to obtain via the markets. Deposits were never affected by the incident.
Payouts have been possible again since Sunday morning for networks and tokens that are in high demand. Binance pointed out that there could be delays at launch due to high transaction volumes. Further currencies are to follow gradually after ongoing security checks have been completed. After the official investigation was completed, Binance announced a detailed final report.
