Hackers Took $6.3 Billion From Binance in 20 Minutes

Binance, the largest cryptocurrency exchange by trading volume, was hit by hackers on Thursday. At 4:05 p.m. Eastern, intruders reached into investor accounts on the platform. Twenty minutes later, they had moved just over $6.3 billion in digital assets out of reach. The theft is the largest cyber heist ever recorded.

The speed and the scale of the transfer have drawn comparisons to a bank robbery. Ari Redbord, who leads policy work at the crypto research firm TRM Labs, called the event "the largest bank robbery in human history." TRM Labs has assisted Binance in tracing and recovering some of the stolen funds. Redbord described a scenario where someone walks out of a bank with $6.36 billion and then moves the money "at the speed of the internet," adding, "This is bank robbery in the age of technology."

Binance has worked with other exchanges and partners to freeze about $3 billion of the cryptocurrency taken. The exchange has also stated it will repay customers who lost funds in the incident. It has not disclosed the method it will use for those payments. The specific way hackers entered the investor accounts remains under investigation.

Investigators have pointed to a North Korean military hacking unit known as TraderTraitor. Researchers cite the sophistication and speed of the operation when making the connection. TraderTraitor was also responsible for the theft of $1.5 billion from the exchange Bybit last year, which had been the largest cyber heist prior to this event. Redbord stated that North Korea maintains professional hacking teams within its military. He said the funds are intended for weapons proliferation and other destabilizing activity.

Cryptocurrency exchanges function similarly to stock markets such as the New York Stock Exchange or Nasdaq, but they handle digital assets like Bitcoin rather than shares. A range of participants uses these platforms, from financial institutions to individual investors. A key feature of these services is that customers can buy and sell digital currency and leave the assets with the exchange for safekeeping. This arrangement makes exchanges attractive targets for hackers.

The regulatory environment for crypto differs from that of traditional finance. Amanda Fischer, policy director and chief operating officer at Better Markets, a financial consumer advocacy group, noted the distinction regarding customer funds. "You may trade on the New York Stock Exchange, but you don't keep your funds with the New York Stock Exchange. You keep it with your broker, and your broker is audited and regulated by the SEC," Fischer said. She added that brokers must carry insurance to cover customers in the event of a cyber attack, stating, "So the regulatory framework for crypto is much weaker than what investors in the US enjoy in other markets." Fischer also warned that if a trade goes bad, it can become irresistible to dip into client funds to cover losses. "But we know that that can cascade into catastrophe for investors," she said.

Binance has said it will repay affected customers, though current regulations do not require it to do so. In 2022, FTX, then the largest crypto exchange, collapsed after using customer funds to cover its own losses. Its founder, Sam Bankman-Fried, was sentenced to 25 years in prison for fraud and other charges.