Home News Binance Hack Highlights Security Risks of Crypto Treasury
Victims of the Oct. 29 hack that stole approximately $6.3 billion in digital assets from crypto exchange operator Binance will be made whole using company funds, the exchange operator announced the day after the hack.
Richard Teng , Co-CEO of Binance, said in a video statement posted on X that the company has already used $5 billion to purchase the affected digital assets, including USDC, USDT, BTC, and others, through market and over-the-counter purchases.
“Most of what we earn from day-to-day operations is held in crypto assets and then is reinvested into the business and security,” he said. “Because we believe in crypto and the long-term value of this industry, this is precisely why we are able to absorb a loss of this size immediately with our own money.”
Binance plans to release a full proof-of-reserves report by Nov. 2. Until then, it has paused withdrawals to investigate, rebuild, and retest its entire infrastructure. The move has frozen an estimated $3 billion in digital assets, including $2.3 billion in stablecoins such as USDT and USDC, according to CoinDesk .
Binance initially said the hacker gained access to its system via a compromised laptop belonging to a DevOps engineer, but further investigation revealed that the hot wallet hack, which is used for regular transactions, was far more complex and involved multiple breach points.
“The attacker used a self-destruct mechanism that destroyed tooling and tracers as they ran, which makes it more difficult for us to trace and investigate,” said Teng. “The attacker used a known multi-signature protocol, EIP 7702, to obtain on-chain execution approval of a hot wallet. The delegation did not pass through our normal approval controls.”
“The attacker sold about 325 million USDT to market makers within minutes of receiving it,” said Ari Redbord, global head of policy at TRM Labs. “This shows how quickly stolen funds can reach unsuspecting counterparties.”
CFOs of firms with stablecoins frozen by Binance should prepare to prove that the frozen assets belong to their companies by providing copies of account agreements, every deposit and withdrawal address, transaction hashes, statements, and approval logs.
“Treasury should own that file, and copies should live on your own systems, since a custodian’s platform can go dark during an incident,” said Redbord. “When issuers like Tether and Circle freeze funds, the paper trail decides who gets them back.”
He also suggested that every corporate treasury have its custodian commit to five things in writing: a set time to inform you of an incident, clear legal title to the company’s assets that is separate from the custodian’s title, reviewable insurance and audit controls, systems divided by chain and wallet type, and round-the-clock cooperation with stablecoin issuers and law enforcement.
“This hack showed what that cooperation can do, because issuers froze about $2.7 billion within hours,” said Redbord. “Test it before you need it.”
Rob Daly writes about the economy and fintech. You can reach him at rdaly@gfmag.com