Crypto stocks slide as $6.3 billion Binance hack rattles market

Cryptocurrency-related stocks tumbled on Friday after Binance disclosed a security breach with an estimated impact of $6.3 billion, marking the largest crypto theft on record. Coinbase Global Inc shares fell 13%, while Robinhood Markets Inc dropped 8%. Circle Internet Group lost 8.5%, and MicroStrategy Incorporated declined 8%. Bitcoin fell more than 4% to below US$78,000, and Ether dropped to a two-month low near US$2,180.

The breach at the world's largest cryptocurrency exchange unfolded rapidly on October 29. About $6.36 billion was transferred out of Binance wallets across ten blockchains in roughly 20 minutes, according to blockchain intelligence firm TRM Labs. Binance estimated the impact at around $6.3 billion. Following the incident, Binance temporarily suspended withdrawals and deposits while carrying out security checks, though co-founder Yi He stated that customer withdrawals should resume within the next 48 hours.

How did the breach happen and who is responsible?

Binance's initial investigation indicated that an attacker may have gained access through a compromised laptop belonging to a DevOps engineer, allowing unauthorized withdrawal transactions to be submitted through a service container. However, co-CEO Richard Teng later stated that the attack involved a more complex process rather thanesch the misuse of a single engineer's permissions, and the exchange noted that its investigation uncovered additional points of breach without publicly detailing them.

TRM Labs gave a detailed account of the Ethereum transactions, saying the attacker exploited an EIP-7702 delegation feature to turn a Binance hot wallet into a mechanism that automatically forwarded incoming funds to an attacker-controlled address. Transfers from wallets on the other nine blockchains involved ordinary signed transactions. Blockchain intelligence firms TRM Labs and Chainalysis attributed the attack with high confidence to TraderTraitor, a hacking unit linked to North Korea. TRM Labs noted that features of the attack matched earlier North Korea-linked heists like the Bybit and KelpDAO hacks, including small Tornado Cash withdrawals funding an operator wallet, staging well before the theft, and signatures obtained in advance before being executed in one burst. Binance has not publicly confirmed this attribution, while the FBI stated it was aware of the incident and in touch with public and private partners.

How much money was frozen and recovered?

Industry partners moved swiftly to contain the fallout. TRM Labs said Tether, Circle, Ripple and World Liberty Financial froze approximately $2.67 billion in stablecoins linked to the incident, while Arbitrum's Security Council separately froze 8,426 ETH and 74.6 million ARB, bringing the total frozen to roughly $2.7 billion. Tether CEO Paolo Ardoino stated that the company froze more than $1.5 billion in USDT. Circle locked more than $800 million in USDC, and Ripple helped halt approximately $200 million. World Liberty Financial, a cryptocurrency venture associated with the Trump family, froze approximately $27 million in its USD1 stablecoin.

These frozen assets have not been automatically returned to Binance or its customers. Furthermore, Bitcoin and Ethereum are not issued by a central company with the power to blacklist individual tokens, meaning stablecoin issuers cannot freeze Bitcoin or Ether held in private wallets. TRM Labs estimated that the attacker still held more than 420,000 ETH and 18,270 BTC, worth approximately $2.4 billion at the time of its assessment.

Who is covering the losses and what do experts say?

Binance pledged to cover all customer losses through its Secure Asset Fund for Users, known as SAFU, and company resources. The Block reported that Binance had allocated more than $6.34 billion in company funds and reserves for that purpose, including approximately $5 billion in affected digital assets, with the remainder being acquired. That commitment is separate from the approximately $3 billion frozen by industry partners.

Even what is confirmed so far points to a familiar pattern. If reports are accurate, attackers compromised a single employee's laptop and used the legitimate access it held. That should tell every organization where the real perimeter now sits. Criminals no longer break in, they log in.

Tomas Sinicki, managing director at Coveron, via finance.yahoo.com

Nigel Green, CEO of financial advisory firm deVere Group, questioned whether Binance's emergency reserve would be sufficient, noting the fund is estimated to hold around US$1.2 billion, potentially covering only a fraction of the assets that remain unfrozen. Green added that the incident could accelerate regulatory pressure on cryptocurrency platforms in the US, Europe and Asia.

What should Binance users do right now?

Tomas Sinicki, managing director at Coveron, an identity theft and scam protection service developed by Nord Security, advised that much of the story is still uncertain regarding final losses, breach points, and responsibility. For individuals holding digital assets, experts and analysts point to several practical safeguards:

• Never keep more on an exchange than needed for trading, as long-term holdings belong in a self-custody wallet where the user controls the keys.
• Be skeptical of urgency during market panic, watching out for follow-up scams, fake exchange support messages, and phishing emails promising recovery assistance.
• Limit what a single compromise can unlock by using unique passwords, enabling multifactor authentication, and regularly revoking permissions for unused apps and services.
• Act fast on fraud alerts and monitor credentials and personal data from past breaches circulating on the dark web.

Meanwhile, public figures clashed online as the crisis unfolded. Elon Musk posted sarcastically about internet exploits and traded messages with Binance founder Changpeng Zhao, who had posted a warning about clicking suspicious email links a day before the breach. Zhao replied to Musk on X, writing, Elon, have a lot of respect for you, but bad time to troll. Please stop, and noting that Binance's SpaceX stake from a previous investment is worth more than a billion dollars. Binance co-CEO Yi He confirmed that annual revenue is enough to cover the losses without selling those shares.