Binance hack exposes crypto risk – disappearing money - Moneyweb

The theft of at least $6.3 billion in cryptocurrency from the world’s marquee digital-asset exchange shows that however sophisticated the fortifications, high-tech criminals are still finding a way in.

Hackers absconded with the biggest single haul in the history of cyberattacks, forcing the exchange, Binance, and its partners to freeze billions of dollars of assets, and shaking confidence in crypto-market infrastructure.

Binance outlined details of the hack and its mitigation efforts in a series of X posts starting Thursday evening. The exchange and its co-founders pledged to make good on all losses, and temporarily suspended withdrawals while sorting through the fallout.

For an industry that has at times seemed on the brink of institutional acceptance, the incident is a stark reminder that the basic task of securing people’s money is a challenge that crypto firms have yet to master.

Unlike traditional Wall Street exchanges, platforms such as Binance serve as both trading venues and custodians of investor funds. That makes them ripe targets for attackers armed with increasingly advanced infiltration technology in the age of artificial intelligence.

A cyber-attack of this level is a matter of when, not if, particularly alongside the rise of AI, said Andy Ward, a longtime cybersecurity expert in charge of international business at Absolute Security.

The issue is potentially existential for crypto firms that have been trying desperately to become mainstream. The industry has been pushing everything from tokenized stocks to perpetual futures as replacements for longstanding instruments of regular financial markets.

For critics who have warned the onslaught is happening too fast for technology and regulation to keep up, this week’s incident provides fresh evidence. The lack of any overarching legislative structure around crypto makes the industry the Wild West in many ways, said David Zervos, counselor to Treasury Secretary Scott Bessent.

The hack extends a string of costly breaches across the cryptocurrency industry, including in recent months.

• In August, hackers absconded with more than $100 million worth of Bitcoin from thousands of wallets secured by hardware devices made by Canada-based Coinkite Inc.
• In September, crypto exchange Bitget said attackers made off with about $388 million.
• In October, criminals tampered with Ledger hardware wallets distributed through a Southeast Asian reseller, with blockchain researchers estimating losses of more than $90 million.
• Before this week’s Binance hack, the largest had been a $1.5 billion theft from Dubai-based Bybit in February 2025.

The incidents – especially Binance’s – highlight the breadth of vulnerabilities facing crypto businesses, from their own wallets and technology systems to supply chains and outside providers.

The real issue here is that these are unregulated offshore exchanges, and they don’t have the same sorts of safeguards that we have in our financial markets here in the United States, said CFTC Chair Michael Selig.

Binance’s initial investigation suggested that the hack stemmed from an engineer’s compromised laptop, according to one of its X posts. Blockchain analytics firm TRM Labs blamed the hack on North Korea, saying preparation started at least 36 hours before the theft.

On the evening of October 29, billions of dollars in crypto began leaving wallets belonging to Binance across 10 blockchains – including Bitcoin, Ethereum, Solana and XRP – and flowing to addresses controlled by a single attacker, TRM said.

Binance pegged the stolen sum at $6.3 billion, while blockchain analytics firms Chainalysis and Elliptic tallied $6.4 billion.

For exchanges holding billions of dollars in customer assets, the challenge is no longer simply securing private keys or keeping most funds in offline storage. Wallet systems increasingly involve multiple signers, automated transaction processes, smart-contract permissions and external service providers.

The lesson for an allocator isn’t that crypto is risky. It’s that an exchange balance is an unsecured loan to a company that can lose its keys, said Luca Parlamento, founder and chief investment officer at D2 Finance.