Security incident rocks Binance

Reports of suspicious withdrawals from cryptocurrency exchange Binance have emerged in what could be one of the largest security incidents in the history of digital assets, prompting stablecoin issuers Tether and Circle to freeze more than €2.14 billion in assets related to the incident.

Tether initially froze approximately €1.41 billion in USDT, while Circle froze more than €719 million in USDC. These are digital assets whose value is generally pegged to the US dollar. The freeze means that the marked coins can no longer be normally disposed of, but does not mean that the money has been returned to the owners.

Binance also presented the initial findings of its investigation on October 30. The attacker allegedly gained access to the service environment through an infected laptop of an employee in charge of development infrastructure and initiated unauthorized withdrawals. The company has not yet found evidence of the disclosure of wallet private keys.

The estimated amount of all affected assets is around €5.66 billion, but this is not yet confirmed as the actual amount of loss. According to the exchange, around €2.7 billion has already been blocked on-chain.

The exchange has temporarily suspended deposits and withdrawals and has assured that any losses will be covered from its own funds and the SAFU protection fund. It assures users that their funds are safe.

The case also reveals an important feature of stablecoins: Their issuers can freeze certain assets, which allows for rapid damage limitation, but raises questions about centralized control.