Binance, the biggest cryptocurrency exchange in the world, has set aside over $6.34 billion to cover assets stolen in a recent cyber attack. They assured customers that their funds are safe.
Richard Teng, the co-CEO of Binance, shared this information in a video after the security breach on Friday. He said the company will use its own funds to cover all losses.
Earlier on Friday, Binance estimated the financial impact from the security incident in a post on X. This incident included unauthorized withdrawal transactions totaling around $6.3 billion.
The company confirmed that it would cover all losses using its Secure Asset Fund for Users (SAFU) and other company funds. According to Teng, $5 billion of the reserved funds is already in the same cryptocurrencies affected by the attack, such as USDC, USDT, Bitcoin, Ethereum, and BNB.
"We are committed to covering all hacked losses through our company funds. Your assets are safe," he stated. Teng also mentioned that Binance is recovering some of the stolen assets and is looking to get the rest through cryptocurrency markets and over-the-counter (OTC) channels.
He clarified that the incident impacted the exchange’s own hot wallet, not customer funds. He explained that Binance keeps most user assets in cold wallets and only moves them to hot wallets when withdrawals are made.
"We NEVER use any customer funds, so they are not impacted. What was affected in this incident was Binance’s own hot wallet," he said. He also noted that the company would release an initial proof-of-reserves report expected by Monday, allowing for public verification of their assets.
The company's early investigations suggested that the security breach might have been linked to a compromised laptop belonging to a DevOps engineer. This might have allowed an attacker to access a service container and make unauthorized withdrawal transactions.
While updating on the investigation, Teng said Binance’s initial findings had expanded due to further discoveries, revealing more points of breach. He described the attack as complex, stating that the attacker used a self-destruct mechanism to erase tools and traces, complicating the company's investigation.
He mentioned that the attacker took advantage of the EIP-7702 multi-signature protocol to get on-chain execution approval over a hot wallet. This bypassed Binance’s usual approval controls.
"This was not carried out by one person. Our initial investigation suggested that the security incident may have involved a compromised laptop; however, our subsequent investigation has uncovered additional points of breach," he revealed.
The exchange has paused its withdrawal service while it rebuilds and tests its systems. Teng expressed hope that Binance would restore withdrawals by the Sunday deadline, which he set at within 40 hours of his address.
He added that the company is also reviewing its security, including its endpoints, cloud infrastructure, key management, and transaction-signing systems.
"Third, we are completing the purchase of the remaining assets and will verify in our Proof of Reserves. We will share a full Proof of Reserves report by Monday, and we hope to give an initial view of Proof of Reserves before that," the Binance Co-CEO said.
Teng mentioned that Binance is collaborating with law enforcement, blockchain intelligence firms, token issuers, and other cryptocurrency exchanges to trace and recover the stolen funds. He also acknowledged industry partners who helped freeze the affected assets and supported the company's response.
He confirmed that the company will keep working with authorities to ensure that those responsible are held accountable.
Drop your comment
No comments yet — be the first to drop the gist 👇