Binance is currently in a rare and challenging moment after it suffered the largest crypto hack in history against its platform, which stole up to $6.3 billion in various crypto tokens including Bitcoin, Ethereum, USDT, and USDC.
The crypto behemoth, who for several years consistently carried the title of the biggest crypto trading exchange in trading volumes is now in a rare moment in which it appears embattled.
The Chief Financial Officer, Kaiser Ng, has just left the company, raising suspicions about the health of the company. He was replaced by Justin Yek from Airwallex although Binance’s CEO said that the departure was planned six months in advance and has nothing to do with the hack.
Binance’s cash reserves have shrunk after the hack, pairing just slightly above their clients’ reserves. The $6.3 billion hack was also followed by a short bank-run with customers withdrawing their funds.
Blockchain analysts have verified that the hack was execrated by North Korea’s TraderTraitor unit, which was also responsible for the Bybit hack. Binance says that the hack happened after one of their developers had his laptop compromised by someone offering him a lucrative job, with the developer sitting for a job interview.
Binance says it has set aside up to $6.34 billion in company funds without financing and debt. Its previous cushion of digital crypto Dollar reserves (Tether and USDC) fell from 12% to 4% above clients assets. The figure is also much lower than it was during Binance’s highs. Their USD crypto reserve currently states a total of $24.6 in Tether and $5.4 in USDC with up to $30 billion of these being client assets. As of yesterday, blockchain analysts detected up to $23 billion worth of stablecoins on Binance’s identifiable wallets.
Binance has similar risks to a bank and its collapse can wipe out the deposits of many people. It also carries a systematic risk to the whole crypto industry and markets.
Despite carrying this deep risk, Biance doesn’t publish its accounts and sits behind a very opaque structure. It is currently struggling to get a MICA license to legally operate in Europe. There is no way to independently verify Binance’s current financial state. The platform says deposits are outpacing withdrawals again following a brief bank run.
Message below by Binance’s CEO Richard Teng.
Note that the hack concerns Binance’s global platform Binance.com and not Binance.us
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