The largest cryptocurrency hack in history has rattled the market.
According to an October 30 Bloomberg report, Bobby Lee, founder of digital asset hardware wallet company Ballet Global Inc., stated bluntly that the Bitcoin stolen from Binance in this hack is nearly impossible to recover. "That money is gone. The stolen Bitcoin is all in the hands of the hackers."
As previously reported, this incident involves assets worth as much as $6.3 billion and has been called the largest hack in cryptocurrency history. Binance has suspended all deposit and withdrawal services and promised to cover all user losses. So far, about $3 billion of the affected assets has been frozen on-chain, but Bobby Lee stressed that "freezing and recovering are two different things." Stablecoins are the only asset class with a realistic chance of recovery, while the outlook for recovering cryptocurrencies such as Bitcoin is extremely bleak.
The market reaction has been relatively restrained. Bitcoin briefly fell below $77,000 after the news broke, touching its lowest level since September, and is currently down less than 1%. Bobby Lee believes that "from the big picture, the total crypto market is measured in trillions of dollars. Losing one or two billion, or even five billion dollars, is not the end of the world."
The Largest Crypto Hack in History: $6.3 Billion in Assets Affected
According to reports, Binance confirmed in a post on X that the incident involves total assets of about $6.3 billion, and about $3 billion has already been frozen on-chain. Binance co-founder Yi He said withdrawals are expected to resume within 48 hours, and the company will bear all losses to ensure "user fund safety."
According to TRM Labs analysis, the hackers appear to have exploited a vulnerability in Binance's transaction authorization mechanism. After gaining access to the exchange's internal systems, they used internal software to authorize transfers across 10 different blockchains, including Bitcoin and Ethereum, in a highly professional manner.
Binance said the incident may have involved the compromise of a software engineer's laptop, but stressed that "no evidence of any wallet private key leakage has been found."
On the emergency response front, the two major stablecoin issuers acted quickly. Tether CEO Paolo Ardoino said in a post on X that more than $1.5 billion in stablecoins "potentially related to the Binance hack" had been frozen. Circle Internet Group Inc. head Jeremy Allaire said that amid "reports of a potential Binance vulnerability," $800 million in USDC had been frozen.
Bobby Lee pointed out that it is precisely because stablecoins have a centralized freezing mechanism that their recovery prospects are far higher than decentralized assets such as Bitcoin. However, he also stressed that even if assets are frozen, Binance still needs to go through a lengthy process of cooperating with law enforcement investigations and formally claiming the frozen assets.
Binance's emergency insurance reserve fund SAFU (Secure Asset Fund for Users), established in 2018, usually maintains a scale of about $1 billion and is regarded as a customer protection mechanism for extreme situations. However, in the face of potential losses of $6.3 billion, the fund's ability to cover them is clearly facing a severe test.
Short-Term Pressure on the Market
Fredrick Collins, CEO and co-founder of crypto data platform Velo Data, said, "The rumored Binance hack is undoubtedly pushing prices down. Binance is enormous in the crypto space, and any blow to confidence in it is a blow to confidence in the entire industry, especially when the market is already jittery about the growing cyberattack capabilities of AI."
It is worth noting that this incident comes as the market was already facing multiple pressures: $11 billion in crypto options are set to expire on Friday, and the U.S. midterm elections will be held next week. If Democrats retake one or both chambers of Congress, it could bring stricter regulatory scrutiny to the crypto industry.
This incident is not an isolated case, but the latest in a recent string of frequent crypto security breaches. In recent months, Bitget suffered the loss of hundreds of millions of dollars in assets, and tampering incidents related to Ledger devices also caused millions of dollars in losses.
Tian Zeng, CEO of crypto hedge fund Third Eye, said, "This is a huge harm to the crypto industry, because the sector continues to suffer successful hacks. In an era when the latest AI models iterate every two weeks, vulnerabilities are constantly being exploited, making this industry increasingly dangerous."
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