Key points
- Estimates of Binance's outflows range into the billions
- Binance edited its user-funds statement three times
- Tether and Circle froze some of the funds
Binance said Thursday, October 29, that it is investigating "a potential security issue" after billions of dollars in crypto moved out of wallets linked to the exchange.
Binance, the world's largest crypto exchange by trading volume, has not called the incident a hack or disclosed a loss. It said $2.54 billion of funds had been frozen as of Thursday evening.
The transfers, first reported by The Block, came from Binance hot wallets, the online accounts used to process customer withdrawals. The first transfer went through at 4:24 p.m. ET.
At 8:17 p.m. ET, Bitcoin was at $77,772, down 4.2% over 24 hours, while BNB, the token tied to Binance, was down 8.6% at $694.26.
Analysts disagree on the size of the outflows
Blockchain analyst Spreek tracked about $3.55 billion moving into one unlabeled wallet. Conor Grogan, a director at Coinbase (COIN), estimated the total at up to $5.8 billion.
Crypto reporter Molly White cautioned that some wallets included in the higher estimates may not be related. She said figures above $5 billion are likely an overestimate. Binance has not explained how the funds left its wallets.
Binance changed its statement on user funds
Binance posted on X at 5:15 p.m. ET that its teams were "actively investigating." It edited the post three times over the next 14 minutes, the post's edit history shows. A 5:16 p.m. version added that Binance had "not confirmed any impact to user funds." A 5:24 p.m. version dropped that sentence, and a 5:29 p.m. version added that user funds are "completely safe."
Changpeng Zhao, Binance's founder and former chief executive, wrote on X that "it does look like a hack on Binance." Zhao, who no longer runs the exchange, said he expects "all user funds will be fully covered." At 6:23 p.m., Zhao quoted an estimate from DefiLlama founder 0xngmi that Binance's loss was about $1 billion after the USDT and USDC freezes, and wrote, "Loss might be a bit higher than that, but will cover."
Binance co-founder Yi He said at 6:22 p.m. ET that withdrawals are "currently disabled until the environment is confirmed to be secure." The exchange said withdrawals would resume once the security issue is resolved.
Tether and Circle froze stablecoins tied to the Binance outflows
USDT and USDC are stablecoins designed to track the US dollar. Their issuers, Tether and Circle (CRCL), can block specific addresses from moving them. Tether chief executive Paolo Ardoino said the company froze more than 1.567 billion USDT. Circle chief executive Jeremy Allaire said Circle had frozen more than 800 million USDC in coordination with law enforcement.
Binance said its $2.54 billion total "may continue to increase as our teams work closely with law enforcement." The Tether and Circle figures add up to about $2.37 billion. Yi He said Ripple helped halt the movement of $200 million of the funds, and World Liberty Financial co-founder Zach Witkoff confirmed about $27 million of its USD1 stablecoin was frozen. Binance has not said which freezes make up its total.
The reported freezes include stablecoins. Bitcoin and Ether have no central issuer that can freeze them.
In September, hackers returned most of the $320 million in bitcoin they took from Blockstream's Liquid network. Binance had not published an incident report as of Thursday evening.
