Crypto exchange: Customers withdraw billions from Binance after hacker attack

Singapore. After what is probably the biggest theft in history, investors are turning their backs on the Binance trading platform in droves. Customers withdrew $3.64 billion after resuming withdrawals, the company said on Monday. This corresponds to 2.1 percent of the assets under management. The situation is now stabilizing again.

The “Financial Times” estimated the outflows at five billion dollars, citing data from the analysis platform DefiLlama. According to Binance, customers initially withdrew $4.6 billion, but around $1 billion has now flowed back.

The cyber attack did not trigger a panic reaction, said Tim Sung, researcher at the financial services provider HashKey, which specializes in digital assets. “However, the damage to investor confidence is likely to extend far beyond the stolen assets.”

Binance customer Ryan Tan, on the other hand, emphasized that he was in no hurry to withdraw his money from the crypto exchange. Since the bankruptcy of Binance competitor FTX four years ago, he has kept a large portion of his cybercurrencies in his own digital wallet instead of in an exchange account. Jay Koh, board member of the Asia Web3 AI Association (AWAA), pointed out that trading platforms play an important role in trading Bitcoin & Co. The non-profit AWAA works to spread the blockchain technology on which cryptocurrencies are based.

At the end of last week, criminals gained access to Binance's IT system and transferred cryptocurrencies worth a total of $6.3 billion within minutes. The US Federal Police FBI and private analysis firms blamed state-controlled hackers from North Korea for the attack.

The falling overall market capitalization of stablecoins, whose price is usually linked to a specific currency, suggests that many investors have completely withdrawn their money from cryptocurrencies and shifted them into traditional investments or cash.

“A hacker attack on a cryptocurrency exchange is like a bank robbery at internet speed,” said TRM manager Ari Redbord. This makes anyone responsible for other people's money more cautious. By Monday, the cryptocurrency market had partially recovered. Bitcoin was up almost half a percent at $78,061, and Ethereum gained 1.2 percent to $2,290.

Binance wants to compensate those affected by the cyber attack. To this end, the company says it has already made available six billion dollars from its corporate treasury, an insurance fund and a fund intended for hacker attacks.

At the same time, the trading platform is working hard with numerous partners to track down the stolen goods. Cryptocurrency provider Circle announced on Monday that it had frozen $1.1 billion in cybercurrencies.

Stolen funds can be traced, explained Jonathan Benton, founder and boss of the company iSanctuary, which specializes in the recovery of crypto assets. The challenge is to gain access to the stolen goods before they disappear. “The future of cryptocurrencies will depend not on how much money flows into the market, but on how safe that money is once it is invested there.”