Binance records $4.72 billion in net withdrawals after gradual resumption
Key Facts
Binance customers withdrew a net $4.72 billion since the exchange lifted its withdrawal suspension on Sunday morning, Reuters reported on November 2, citing a spokesperson for the platform. Binance said net outflows equaled about 2.8% of assets held on the exchange. Reuters described the share as relatively modest. The exchange said withdrawal volumes declined and stabilized after an initial surge. A spokesperson also said inflows totaled $2.7 billion. The activity followed a security attack that prompted the exchange to suspend withdrawals, which it then restored in stages.
Binance began gradually resuming withdrawals on November 1 after security checks and a readiness assessment, restoring assets and networks in sequence. It announced that the first phase would begin between 06:00 and 09:00 UTC. The resumption did not cover all coins: Bitcoin withdrawals via the Bitcoin network and ether and some dollar-linked stablecoins via Ethereum returned. The exchange's page showed, according to Reuters, that withdrawals remained partially suspended for most cryptocurrencies. Binance confirmed that deposit services remained open during the suspension, along with other unaffected services. The exchange also restored the option to withdraw cash dollars on Monday, November 2.
Binance estimated the incident's total impact at about $6.3 billion in token assets and said it would cover the stolen funds with company resources and the Secure Asset Fund for Users, known as SAFU. The exchange said about $3 billion of affected assets had been frozen on-chain by the time of its October 30 security update. In its November 1 update, it said it had covered about 95% of the affected amount, compared with about 90% in the previous update. It added that the remaining 5% consisted of less liquid tokens. Binance had announced on October 30 that it was allocating more than $6.34 billion in company funds for coverage, including $5 billion in the affected token assets, and said this covered about 80% of the amount at the time. In an October 31 update, the company raised the reported share to 90%.
Binance said its hot wallets were breached at about 20:05 UTC on October 29 and estimated the value of the affected token assets at about $6.3 billion. The Associated Press cited TRM Labs as saying the attacker moved about $6.36 billion from Binance wallets across ten blockchain networks, with most transfers completed in about 20 minutes. TRM Labs attributed the attack to the North Korea-linked TraderTraitor group, the agency reported. Binance said its initial investigation indicated that a DevOps engineer's laptop may have been compromised, before a later investigation uncovered additional points of compromise. The company added that, at that stage, it had found no evidence that wallet private keys were exposed. The current withdrawal volume differs from activity on the exchange after the collapse of FTX, when it recorded net outflows of about $6 billion over 72 hours in December 2022, according to Reuters.
On reserves, Binance said on November 2 that balances of ten tokens, including BTC, ETH, USDT, BNB, SOL, USDC, XRP, USD1, RLUSD and ZEC, were fully backed at 100%. It added that holders of these tokens could independently verify that their balances were backed at a ratio of at least 1:1, based on the reserves snapshot dated October 31. The company said it would replenish the SAFU fund to bring its size back to about $1 billion after using part of it to cover the affected assets. It also pledged to publish a report on the incident after the investigation is complete. A new proof-of-reserves snapshot covering a larger number of tokens is scheduled for November 4, after which the company expects preparation of the updated full proof to take about 40 to 50 hours.