Investors pull billions in funds from Binance after record $6.3bn hack - The Guardian

The platform was hit by the biggest heist in cryptocurrency history on Thursday, with experts identifying North Korea as the probable culprit. Binance initially froze withdrawals during its investigation but announced a phased reopening by Sunday, having processed $4.6bn in withdrawals and $1bn in deposits, resulting in a net outflow of about $3.6bn – representing 2.1% of its $171bn in total assets under management.

Company Response

Binance confirmed the numbers in its latest proof of reserves snapshot, with a full report expected on Monday. The company stated that after an initial spike, withdrawal volumes had declined and were stabilizing as expected, while deposit volumes remained substantial.

We know how important safe and reliable access to your funds is and will share details of the next phase as soon as we can.

The platform restored withdrawals for 15 networks and assets in the first phase, including ethereum, USDT and USDC tokens on the ethereum blockchain, and some on the BNB Smart Chain. Trading in Dogecoin and Avalanche currencies later resumed on their respective platforms.

Recovery Efforts

Binance reported it had replenished 90% of the stolen amount, with the remaining 10% consisting of less liquid tokens that may take longer to acquire. The company committed to covering the remaining 10%, ensuring users wouldn't bear the financial impact.

Richard Teng, Binance's co-chief executive, described the breach as a "complex attack" involving a compromised laptop and malicious software designed to delete evidence. The company set aside $6.34bn from its secure asset fund for users, bitcoin reserves, futures insurance fund, and corporate treasury to cover the losses.

North Korean Connection

On Saturday, the FBI confirmed that a North Korea-affiliated group called TraderTraitor was behind the hack. TraderTraitor is believed to be part of the Lazarus Group, which gained notoriety in 2014 for hacking Sony Pictures.

The FBI observed TraderTraitor actors converting stolen assets into ethereum and expected further laundering through decentralized finance services. The agency urged private sector entities to block transactions with addresses linked to the group.

Market Impact

The hack caused significant market volatility, with Bitcoin plunging nearly 5%, ethereum dropping nearly 6%, and BNB, native to Binance, tumbling nearly 10%. The incident has raised concerns about artificial intelligence's potential to compromise cryptographic security.

The sheer scale of the hack has spotlighted North Korea's capacity to generate illicit revenue through cyber means, particularly as the country faces extensive international sanctions over its nuclear and missile programs.