Binance's possible hack triggers US$3 billion freeze in crypto assets

KUALA LUMPUR: Binance, the world's largest cryptocurrency exchange, said on Thursday it had frozen US$3 billion in crypto assets as it investigated a potential security breach, with stablecoin issuers Circle and Tether also freezing related assets.

"Binance will cover all hacking losses," Binance co-founder Yi He said, without providing further details about the incident.

The market impact of the potential hack, which could be the largest-ever cryptocurrency heist, according to analytics firm Chainalysis, was felt immediately in early Asian trading on Friday.

Bitcoin fell about 2 per cent to a six-week low of US$77,646, while ether dropped around 2 per cent to a two-month low of US$2,238.76.

BNB, a token originally launched as Binance Coin that can be used to pay Binance fees, fell more than 8 per cent over the past 24 hours to US$694, according to market aggregator CoinGecko.

Crypto exchange Coinbase Global fell 4.8 per cent, while shares of bitcoin buyer Strategy dropped nearly 6 per cent in extended US trading.

Binance said the amount frozen could increase as it worked with law enforcement agencies, token issuers, blockchain intelligence firms and other industry partners to trace and freeze additional assets.

Binance co-founder Changpeng Zhao, who no longer runs the company, said in a post on X that the incident "looked like a hack".

Binance, which allows users to buy, sell and trade digital assets, has more than 335 million registered users globally and held about US$160 billion in assets under custody, according to its 2024 annual report.

BINANCE HAS SECURE ASSET FUND

Binance operates a secure asset fund for users, according to its website. The reserve is held entirely in bitcoin and is intended to protect user assets in the event of security breaches.

"It's becoming very hard to counter hacks as AI can find vulnerabilities faster than you can fix them," said Bernardo Brites, chief executive officer of Trace Finance, a payments and stablecoin infrastructure company.

"My view is that users will move away from smaller and medium-sized exchanges, (it is) becoming too risky to park your money somewhere that couldn't cover a hack of meaningful size."

Tether said it had frozen nearly US$1.57 billion in assets linked to the incident, while Circle froze more than US$800 million.

Binance said it was conducting security checks and would resume withdrawals once the issue was fully resolved. It added that user funds remained safe and its teams were reviewing the incident.

The exchange also temporarily suspended trading on its Binance Alpha platform as a precaution.

World Liberty Financial, a cryptocurrency company linked to US President Donald Trump and his family, said on Thursday it had worked with cryptocurrency custodian BitGo to freeze funds stolen in what it described as a Binance hack.

Yi said US$27 million in stablecoins and about US$2 million worth of World Liberty tokens had been frozen.

Cryptocurrency firm Ripple also froze roughly US$200 million in funds, Yi said.

Jack McDonald, senior vice-president of stablecoins at Ripple, said the company was closely monitoring reports of a potential exploit involving Binance and was freezing affected funds while coordinating with relevant parties.

INCIDENT ADDS TO STRING OF CRYPTO THEFTS

Miguel Morel, chief executive officer of blockchain intelligence firm Arkham, said data indicated that billions of dollars appeared to have been stolen from Binance by an unknown actor, although the exact cause had not been confirmed.

Morel said the incident began at around 4.30pm EDT (2030 GMT) and appeared to be ongoing.

The incident adds to a string of cryptocurrency thefts. Attackers stole US$2.9 billion worth of cryptocurrency across nearly 150 attacks last year, according to researchers at TRM Labs.

In September, cryptocurrency exchange Bitget said about US$350 million in crypto assets had been stolen from its platform, underscoring the industry's vulnerability to hackers.

Authorities have warned that organised crime groups are increasingly using cryptocurrencies to move funds across borders outside the traditional financial system.

Binance.US, a separate cryptocurrency exchange, said it was not affected by the security incident.

Coinbase said it was also unaffected and was monitoring the situation.

In an unrelated incident earlier on Thursday, prediction market operator Polymarket temporarily halted trading following a security incident involving a third-party provider. It later resumed trading and said it would fully reimburse affected traders.