Binance, the world’s largest cryptocurrency exchange, had more than $6 billion drained from its system in about 20 minutes on Thursday, according to the report. The incident has renewed concerns about security across the crypto market, which has often been promoted as a safe alternative to traditional financial services.
About half of the funds were linked to stablecoins and were quickly frozen by their issuers. The remaining assets were tied to tokens including bitcoin and ether, which lack centralized governing authorities and are likely impossible to recover, crypto researchers said.
Researchers estimated Binance’s losses could exceed $3 billion. That would be a small share of the exchange’s $155 billion in total user assets, but more than its $1 billion emergency fund. Binance said it would cover losses using that reserve and other assets, and assured users that their funds were safe. The exchange suspended deposits and withdrawals after the incident.
The Binance incident came hours after a separate security breach disrupted Polymarket, a crypto-based prediction market. The two events were probably unrelated, and the Polymarket breach was its second apparent attack since June. Analytics firm Bubblemaps said about 700 users lost $2.7 million through unauthorized withdrawals. Polymarket also pledged to reimburse affected customers.
Security experts cautioned that covering customer losses is not a sustainable substitute for operational safeguards. Ryan Kirkley, CEO of crypto infrastructure company Global Settlement Network, said Binance’s ability to absorb the damage was encouraging, but did not demonstrate that its systems were secure. He also warned that relying on emergency freezes and reimbursement promises could undermine efforts to persuade institutions to entrust the sector with more capital.
Centralized exchanges are attractive targets for hackers, in part because they operate outside the strict regulations that apply to banks and other financial institutions, the report said. Crypto has also long been used by criminal organizations to move funds quickly and anonymously across borders.
Binance pleaded guilty in 2023 to violating U.S. federal anti-money-laundering rules, among other charges. The case led to a four-month prison sentence for founder Changpeng Zhao, who remains legally barred from running the exchange, according to the report.
Researchers at Chainalysis said they observed laundering patterns in the Binance incident that they had not seen before. They also noted that thousands of transactions in a short period suggested the attackers were using automation to obscure the trail of funds.
For people who hold crypto on centralized exchanges, one option recommended by Iman Shafiei, founder of Keystone Research Group, is to move assets into a self-custody wallet rather than leaving them on the platform where they were purchased or traded. But self-custody carries its own risk: people who lose access credentials may be unable to recover their funds. Chainalysis estimated in 2021 that about 20% of all bitcoin created could be lost or held in wallets their owners can no longer access.
Most people in the United States who invest in crypto do so through centralized exchanges, which do not offer the federal deposit insurance available at traditional banks, the report said.
Sources: CNN Brasil.