Binance Loses $6.3 Billion in Record Hack: What It Changes for the Market

The Binance exchange has suffered the largest hack in crypto history: according to Cointelegraph and Decrypt, about $6.3 billion was drained from its wallets. For the market this is first of all a blow to trust in centralized custody, not to bitcoin itself. The BNB token, exchange liquidity and the shares of crypto-linked companies came under pressure.

What is known about the attack

Binance disclosed the incident on Thursday evening. On-chain analysts first put the outflow between $5.5 billion and $5.8 billion across three blockchains, then the exchange named $6.3 billion. Tether and Circle froze part of the stablecoins almost immediately: Decrypt counts $1.8 billion, of which Circle blocked $823 million. In total Binance and its partners stopped about $3 billion.

CEO Richard Teng explained that this was not a single "button". The attacker used a contract self-destruct mechanism and delegation under the EIP-7702 standard, which let them bypass the usual approval schemes. The exchange later found additional points of entry and pointed to a compromised laptop of a DevOps engineer. Security specialists quoted by Cointelegraph believe the hacker would have reached the wallets without EIP-7702 anyway, but the standard may have increased the losses.

TRM Labs and Chainalysis tied the attack to the North Korean group TraderTraitor, which is behind the Bybit hack. ZachXBT showed that funds stolen from Binance and Bitget converge on one address.

Then came the race for the exit. Etherscan data showed that wallets tied to the attack were swapping freezable stablecoins for ether on decentralized exchanges, and some DeFi venues paused trading. While Tether and Circle block USDT and USDC, ether and bitcoin cannot be frozen, so the hacker tried to convert everything as fast as possible. The FBI and the US Secret Service are already part of the investigation and are helping trace the stolen assets.

How prices and liquidity reacted

Bitcoin fell below $77,000, BNB dropped about 8%, and liquidations over the day reached $1.57 billion. Still, the hit to bitcoin was milder than it could have been: about 3% against almost 11% in 2018, when Binance last went through a similar attack, Decrypt recalls.

CoinDesk writes that institutional clients rushed to pull funds from exchanges. India's CoinDCX limited the opening of new futures positions because the incident touched liquidity. The RUNE token of the THORChain protocol rose 13%: North Korean groups earlier ran funds stolen from Bybit and Bitget through it, so people are now calling on the protocol to step in.

Cointelegraph notes that momentum indicators hint at a possible rebound, and bitcoin held above $76,000. But the Binance news was not the only weight: tech stocks were falling too, and Intel, according to Decrypt, suffered its worst crash in 50 years. So part of the pressure on the market has nothing to do with the exchange.

Why stocks fell harder than bitcoin

On Friday Coinbase, Circle and Strategy dropped along with the rest of crypto equities, Cointelegraph reports. Investors sold everything tied to exchange infrastructure, even though nobody broke into these companies' own wallets.

Analysts at Cantor Fitzgerald, TD Cowen and Compass Point tell clients to see the dip as an opportunity. In their view this is a security failure at one exchange, not a threat to the whole industry, and bitcoin proxy stocks such as Coinbase, Robinhood and Strategy come with regulatory protection and public reporting. That is the banks' opinion, not a guarantee.

Another signal came from Geoffrey Kendrick at Standard Chartered. He thinks the hack will speed up the move of traders to decentralized exchanges, and he keeps his $100 forecast for the UNI token by 2030.

What exchange account holders risk

Binance set aside $6.34 billion of its own funds to cover losses and said it holds about $5 billion in matching tokens. It will include them in its next proof-of-reserves report. The exchange plans to restart withdrawals on Sunday, CoinDesk writes.

The guarantee, however, rests on Binance itself. Experts quoted by CoinDesk disagreed on the freezes: part of the assets really is blocked, but getting the stolen funds back is a separate story.

• The hacker held 18,270 BTC and more than 500,000 ETH, which is more than Coinbase's bitcoin reserves, so any sale of that size weighs on the price.
• Unfreezable: about $1.4 billion in bitcoin is split across 19 wallets that Tether and Circle cannot reach.
• The attacker quickly swapped stolen stablecoins for ether to get ahead of blocking, and a little-known 2017 token he dumped fell 90%.

Binance is popular among Ukrainians, especially in P2P, so the withdrawal pause matters for the local market too. Anyone planning to sell USDT for hryvnia has reason to compare exchanger rates instead of relying on a single exchange.

Teng assured users that their funds are safe. Trust, though, comes back through verified reserves and stable withdrawals rather than statements, and the first test arrives on Sunday.

Regulators already demand tougher rules

CFTC Chair Michael Selig said the record theft shows why offshore exchanges should register with the CFTC and run to US cybersecurity standards. President Donald Trump said the administration is looking into the incident, and calls for new crypto rules are getting louder. Every big hack pulls exchanges closer to supervision, and that link is visible right now.