Binance, the largest cryptocurrency exchange globally, has reported that it has recovered 95% of the losses incurred from a significant cyber assault that resulted in the theft of about $6.3 billion in digital assets. The exchange utilized its own capital, resources from the futures trading insurance fund, and the SAFU reserve fund to restore its financial position. On November 1, the platform initiated a phased reopening of cryptocurrency withdrawals, assuring clients that they would be fully reimbursed for their losses.
- Binance has compensated 95% of losses after the hack that cost around $6.3 billion.
- The recovery utilized funds from SAFU reserves, corporate resources, and insurance funds.
- The ten major cryptocurrencies are now fully supported by reserves.
- The exchange has started to gradually restore cryptocurrency withdrawals.
- The FBI has attributed the attack to a North Korean group known as TraderTraitor.
Binance has restored nearly $6 billion to its reserves
On October 31, the exchange revealed that it had successfully covered nearly 90% of the losses stemming from the cyberattack that occurred on October 29. By early November 1, Binance announced that this figure had increased to 95%.
The company has allocated over $6.34 billion from its corporate funds to offset losses and acquire necessary cryptocurrencies to restore the collateral backing client accounts.
This effort is not solely focused on retrieving the assets that hackers stole. Instead, Binance is using its resources to buy cryptocurrencies and restore reserves that support its obligations to clients.
As per the company’s announcement, full support has now returned for ten cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Tether (USDT), BNB, Solana (SOL), USD Coin (USDC), XRP, USD1, RLUSD, and Zcash (ZEC).
The remaining 5% of losses pertain to less liquid digital assets, which are harder to acquire in large quantities without impacting their market prices significantly.
To finalize the recovery, Binance continues to purchase the required tokens both through the open market and via over-the-counter transactions with significant partners.
The company emphasizes that users will not bear any financial repercussions from this cyber assault.
How did Binance secure the billions for compensation?
The exchange tapped into three primary funding sources to address these losses.
Firstly, it utilized its own corporate reserves, allowing for rapid purchases of the stolen cryptocurrencies.
Secondly, it leveraged the Futures Insurance Fund, which is typically used to mitigate risks in futures market closures.
Only a portion of the funding above the required threshold for this fund was employed.
The final source was the Secure Asset Fund for Users (SAFU) — a dedicated reserve established by Binance in 2018 to safeguard users in emergency situations, particularly during major hacks.
According to a Reuters report, co-head of Binance Ji He confirmed that half of the SAFU reserves would be allocated to manage the consequences of the breach.
Binance has committed to restoring the fund to around $1 billion in due course to ensure continued financial protection against future incidents.
By employing multiple contingency measures simultaneously, the company was able to rapidly cover most of its losses while also highlighting the financial strain caused by the incident.
Binance has begun restoring cryptocurrency withdrawals
Following the cyberattack on October 29, Binance temporarily halted withdrawals to conduct security checks and prevent further losses.
On the morning of November 1, the exchange began to incrementally restore operations. Initially, Bitcoin withdrawals were made available, followed by the resumption of trading for Ethereum, BNB, Solana, XRP, Dogecoin, and other cryptocurrencies. This first phase includes several blockchain networks, such as Bitcoin, Ethereum, BNB Smart Chain, Tron, Solana, Arbitrum, Base, and others.
The availability of specific assets will depend on the network chosen for transfers.
Binance has cautioned users that temporary delays may occur during this recovery period due to increased platform traffic. Despite the suspension of withdrawals, account top-ups continued to be available.
The FBI ties North Korean hackers to unprecedented cyberattack
On October 29, Binance fell victim to a cyberattack that resulted in the theft of roughly $6.3 billion in cryptocurrencies.
Experts in blockchain analytics estimate that the attackers withdrew the majority of the funds within approximately 20 minutes.
Co-CEO of Binance Richard Teng noted that the assailants likely accessed internal systems via a compromised employee laptop. The investigation also uncovered evidence suggesting the use of malware to obscure their tracks.
On October 31, the FBI announced that the hacking group TraderTraitor, based in North Korea, was responsible for the attack.
The FBI reported that members of the group have already commenced converting some of the stolen assets into Ethereum, which enables subsequent money laundering through decentralized finance services.
Traditionally, North Korea denies any involvement of state agencies in cryptocurrency thefts.
While replenishing its reserves, Binance is collaborating with law enforcement and other crypto firms to trace and freeze the stolen assets.
As of October 30, sources indicate that approximately $3 billion in assets’ whereabouts have been identified. However, tracing or freezing these funds does not guarantee their eventual return to the exchange.
Binance intends to publish a comprehensive report detailing the breach’s causes and investigation findings once audits are finalized.
The restart of withdrawals and the replenishment of reserves mitigates immediate risks for customers, but the process of understanding how the perpetrators accessed such substantial assets remains the focal point of an ongoing investigation.