The cyber-attack on Binance was the great awakening, says ALEX BRUMMER

Updated: 07:53 GMT, 31 October 2026

Nobody can say we weren’t warned. The Bank of England, IMF and other global enforcers have been on alert for weeks over the twin risks of a cyber-attack on the financial system and the madcap financing driving the AI revolution.

It was only a matter of time before the great awakening came around.

Halloween arrived early on ‘Frightening Friday’ with a cyber-attack on crypto-currency exchange Binance and a meltdown in shares of some of tech’s biggest names.

It would be easy to ignore the Binance assault on the grounds that crypto-currencies sit on the fringe of the global financial system and can therefore safely be ignored.

Yet the idea that bad actors from North Korea can get their hands on $6.3billion (£4.8billion) worth of cryptocurrency by breaking into an engineer’s laptop is scary.

Imagine the disruption caused should hackers penetrate the defences of the payments systems that connect the world’s banks or the applications we use daily for online banking.

Halloween arrived early on ‘Frightening Friday’ with a cyber-attack on crypto-currency exchange Binance

The managing director of the IMF, Kristalina Georgieva, recalled at the recent Bangkok gathering that when she was growing up in communist Bulgaria, it was customary in her family to keep a shoebox with hard currency under the bed.

Given the cyber risk to financial institutions and the power of rogue AI, she suggested that maybe it was time to revive an old habit. 

New tools, such as Anthropic’s Claude Mythos, could, in the wrong hands, threaten even the most advanced national security and financial systems.

The rush by big tech and newcomers, such as Anthropic and OpenAI, alongside the ‘Magnificent Seven’ to be on the frontier of the AI revolution is understandable.

The grip Google-owner Alphabet, Facebook and Instagram parent Meta and Amazon have on all our lives is unarguable.

Google's search engine has become so powerful that like Hoover in the past, it has become part of the lexicon.

But there are indications that users conducting searches are going directly to ChatGPT and other AI applications, upending Google’s dominant position in online advertising.

In the past, the tech masters of the universe relied upon cash flow – the money generated from subscriptions and selling their services – to expand. As we learned from Alphabet, which saw a calamitous £400bn wiped off its market value on Thursday, that is no longer true.

The scale of leverage, or borrowing, to stay in the AI and data centre race is expected to hit $1trillion this year. 

Some $3.1trillion of investment in the sector has taken place in the past decade or so.

At a time of elevated interest rates, because of energy market disruption, servicing that debt pile is painful.

Only firms that remain cash-flow positive, such as Microsoft, seem capable of weathering the storm.

Yesterday morning, a hedge fund maven sent me a list of tech stocks that have become unhinged, including Cambridge-based Arm Holdings, quoted in New York, which has fallen 53 per cent from its peak value, chipmaker Intel, down 53 per cent, and data-centre specialist CoreWeave, down 70 per cent. The tech bear market is upon us.

Thank goodness established UK energy, engineering and banking stocks – BP, Rolls-Royce and NatWest – offer a safer harbour as the tech boom flounders.

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