Binance moves 7,499 Bitcoin from SAFU fund worth nearly $581 million
Key Facts
Binance moved 7,499 Bitcoin from its Secure Asset Fund for Users (SAFU) on October 31, worth nearly $581 million at the time of the transfer, according to an announcement published by the exchange. The move was part of its response to a breach of its hot wallets, which it said occurred on October 29 at 20:05 UTC and resulted in the loss of tokenized assets worth approximately $6.3 billion. Binance said it would cover the stolen assets using SAFU and company funds, then clarified that the recovery also used part of its futures insurance fund. This means the Bitcoin transfer from SAFU does not prove that the fund alone bore the losses or financed the full compensation. In an October 31 update, the exchange said 90% of the affected assets had been replenished.
The wallet balance after the transfer showed its Bitcoin holdings had fallen to about 7,500 units on November 2, compared with about 15,000 before the transfer, according to Cointelegraph. The publication valued the remaining balance at about $583 million. This level puts the fund below the $800 million threshold in Binance's policy, but the policy ties rebalancing to a decline in the fund's market value caused by fluctuations in Bitcoin's price. It says the fund's value will be restored to $1 billion when that condition is met. For funds withdrawn following a security incident, the published policy sets no timetable for replenishment. The price-linked rebalancing mechanism therefore differs from the timeline for completing compensation after the breach.
On October 31, Binance said about 10% of the affected assets had yet to be returned and included tokens outside the top 10 assets identified by the exchange. It attributed the delay in completing the recovery to these tokens' relatively low liquidity, which makes acquiring them in the required quantities take longer. In an update published on November 2, Binance raised its estimate of the assets it had covered to about 95%, saying the remaining 5% consisted of tokens outside the aforementioned top 10 and that their low liquidity was prolonging the acquisition process. The recovery rate had been about 80% in an earlier update before reaching 90% on October 31. Reuters also reported that Binance and its partners had located about $3 billion of the affected assets by Friday, October 30, as part of efforts to freeze some of them.
Binance said the asset recovery operations would not leave users with financial losses, and that funding sources included part of SAFU, part of the futures insurance fund and company funds. The exchange did not attribute the 90% coverage rate to SAFU alone, nor did its policy specify a date for completing the replenishment of funds withdrawn from the fund because of the incident. The initial announcement of the breach put the value of the missing assets at about $6.3 billion, while a recovery update said some affected assets had been frozen with the help of industry partners. The coverage rate Binance reports remains tied to updates on affected assets, while recovery of the less liquid tokens continues. The exchange said withdrawals were expected to resume on Sunday, November 1, within the previously announced timeframe and subject to confirmation of specific arrangements.
On proof of reserves, Binance said preparing the full zero-knowledge proof, based on a snapshot of reserves on October 31, takes about 40 to 50 hours because of the computational burden. The estimate published that day was that the proof would be completed by November 3 UTC, allowing holders of any of the 10 tokens to independently verify that their assets were backed at a ratio of at least 1:1. The exchange then announced on November 2 that it planned another update covering more tokens on November 4. After that, it said it would generate a new full proof, estimating that preparation would take about 40 to 50 hours. This schedule places the next update after the expected date of the first proof, as Binance continues to publish broader information about the assets it has replenished.
News of the breach coincided with Bitcoin falling 3.2% on the evening of Thursday, October 29, to below $79,000, according to the Associated Press. EL7 data recorded daily Bitcoin-to-dollar closes of $78,354 on November 1, $76,816 on November 2 and $76,745.05 on November 3. These closes place the price movement in the days following the breach announcement and SAFU transfer, without establishing on their own the cause of the subsequent decline. The transfer of 7,499 Bitcoin was announced on October 31, while Binance said on November 2 that coverage of the affected assets had reached 95%. Recovery of the low-liquidity tokens and publication of the reserve update on November 4 remain among the milestones the exchange set out in its statements.