Exchange Security Under Review After $6.3 Billion Binance Breach

The largest cryptocurrency exchange by volume halted withdrawals after losing $6.3 billion in a late Thursday attack. Binance said it would cover the losses with company funds. The bulk of the theft unfolded in about 20 minutes, according to blockchain analysis firms TRM Labs and Chainalysis, who also said the activity bore similarities to previous attacks attributed to North Korea. North Korea's mission in Geneva did not respond to requests for comment.

Bitcoin dropped more than 4% on Thursday and ether fell more than 5%, with both recovering some ground on Friday. Stablecoin issuers Tether and Circle froze nearly $1.57 billion and $800 million respectively in funds linked to Binance. Bitcoin and ether cannot be frozen because no single entity controls those coins. Chainalysis said the hackers used laundering patterns it had not previously observed.

Coinbase said it changed systems that store cryptocurrency keys offline, stating the moves were made solely out of caution. Kraken said it monitors incidents across the industry for defenses it can apply to its own operations. A Kraken spokesperson said full-time teams look for potential vulnerabilities every day. Harry Donnelly, CEO of crypto risk infrastructure company Circuit, said firms are planning more employee training to counter social engineering, a tactic security experts said may have compromised a software engineer's laptop.

Binance co-CEO Richard Teng wrote on X that the complex attack may have started with a compromised laptop that gave hackers access to systems used to process withdrawals. The company later identified additional breaches, and software built to erase traces of the attack slowed the investigation. Binance halted withdrawals after the Thursday incident. Analysts blamed North Korea for the attack.

Chris Perkins, head of crypto at Franklin Templeton, said security must be addressed immediately for crypto to reach its full potential. Josh Riezman, chief legal and strategy officer at crypto firm GSR, said his firm expects the industry at large to avoid material losses even as Binance handles the exploit. Star Xu, CEO of exchange OKX, wrote on X that the industry needs a real-time alert system that lets participants share information immediately when a hack occurs, coordinate a rapid response, and temporarily freeze suspected stolen funds.

Harry Donnelly said companies are planning more employee training to guard against social engineering attacks. In such attacks, hackers race to launder funds before an exchange detects the breach and token issuers freeze assets.