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Binance experienced a net outflow of US$3.64 billion after suffering a massive hacking attack, but the flow of withdrawals has slowed, and the company is using security funds and its own funds to offset losses.
Binance, the world’s largest cryptocurrency exchange, is facing its largest exchange everhacker Following the theft and the resumption of services on Sunday, a wave of customer withdrawals initially followed, leading to a net outflow of US$3.64 billion from Binance, equivalent to 2.1% of total assets. However, the withdrawal situation gradually stabilised.
Binance released data on deposits and withdrawals on social media, saying that after an initial surge in capital outflows, the outflow rate has slowed. Between 06:00 and 15:30 UTC on November 1, “it processed US$4.649 billion of withdrawals and US$1.01 billion of deposits, with a net outflow of approximately US$3.64 billion.”
The company also said it has now repaid 95% of the assets stolen in the heist. Following the $6.3 billion hacker attack last Thursday, Binance immediately suspended withdrawal services to investigate the incident and stabilize the situation, while promising to fully compensate all affected customers. Analysts had previously pointed to possible North Korean involvement.
After falling to a six-week low last Friday, Bitcoin prices recovered slightly over the weekend, trading above $78,000 on Monday; Ethereum fell to a two-month low last Friday and is now at $2,291.
Binance said the net outflow was equivalent to 2.1% of the company’s $171 billion total assets under management. The exchange provides services to users to buy, sell and trade digital assets with 335 million registered users worldwide.
“This indicates that the size of the withdrawals is a more cautious reaction from investors than any kind of mass flight of funds,” said Redbold, global head of policy at TRM Labs.
The size of fund withdrawals is an early indicator of whether customers still trust Binance and are willing to deposit funds on the platform following the attack.
As funds continue to flow out of the cryptocurrency market, the market capitalization of stablecoins also typically declines, which is what has been happening since Friday. The combined market capitalization of USDT and USDC, the two largest stablecoins by market cap, has declined by about $1.2 billion since last Friday, according to CoinMarketCap data.
Although Binance quickly contained the hacking incident with the help of industry partners and the US government, the theft of digital assets has once again raised questions about cryptocurrency security vulnerabilities. Researchers at TRM Labs reported that hackers stole $2.9 billion worth of cryptocurrency in approximately 150 incidents last year.
However, multiple experts confirmed Binance’s response to the incident, including taking quick action, repeatedly releasing the latest developments to reassure customers, and promising to use the platform’s own profits to compensate customers.
Furthermore, it is not easy to stop dealing with an exchange of the size and scope of Binance. The second-ranked exchange, OKEx, has an asset size of around US$29 billion, which is much smaller than Binance’s current size of around US$171 billion.
Vincent Liu, chief investment officer of Cronos Research, said: “We will not withdraw funds. Binance is the most liquid platform, and if you want to trade or hedge in the cryptocurrency market, you should use Binance. I expect there will indeed be a withdrawal of funds, but as liquidity recovers, many will return.”
