Binance, the world’s largest cryptocurrency exchange, has reported a security breach with an estimated impact of USD 6.3 billion, in what industry analysts describe as potentially the biggest crypto hack on record.
The incident triggered a sell off in digital currencies on Friday, with Bitcoin falling to a six week low and ether also declining. A sell off happens when investors sell assets in large numbers, pushing prices lower.
What is Binance, and what happened?
Binance is an online platform where users buy, sell and hold cryptocurrencies; digital assets such as Bitcoin.
Its preliminary investigation suggests an attacker gained access through a compromised engineer’s laptop and used an internal system to submit unauthorised withdrawals. In simple terms, someone allegedly entered the company’s systems and instructed them to transfer cryptocurrency without permission.
Binance said it had found no evidence that wallet private keys had leaked. A private key is a secret digital credential used to authorise transactions involving cryptocurrency.
Does ‘frozen’ mean the money has been recovered?
Around USD three billion in affected assets has been frozen through cooperation with industry partners. Freezing restricts the movement of those assets; it does not necessarily mean they have been returned to Binance or its customers.
Some of the blocked assets were USDT and USDC, known as stablecoins. These are digital tokens designed to maintain a value close to a reference asset, usually the US dollar. Their issuers can block transfers involving certain addresses.
A blockchain address is a destination used to receive cryptocurrency, while a blockchain is the shared digital record on which transactions are recorded.
What does this mean for customers?
Binance announced a temporary suspension of deposits and withdrawals while security checks were conducted. It said losses would be covered through company funds and its Secure Asset Fund for Users, or SAFU; an emergency reserve intended to protect users.
That is the company’s commitment; freezing assets and completing reimbursements are separate steps. The USD 6.3 billion figure remains an estimate of the incident’s impact, rather than a confirmed final loss after recovery.
Blockchain investigation firms have linked the attack to North Korean hackers.
