Could Binance’s $6.3B hack trigger a wider crypto sell-off?

Binance is looking into a security breach that is estimated to have caused losses of $6.3 billion. It has frozen around $3 billion in assets and has stopped its users from making deposits and withdrawals. But the exchange has not yet determined how much money is lost forever.

What Binance says it found

According to Binance’s statement on October 30, a laptop of a DevOps engineer has been compromised. The attacker may have made use of it to get access to the service container and initiate unauthorized withdrawals. So far, Binance says it has found no evidence that wallet private keys were exposed.

It is not yet clear how much damage has occurred. Binance has estimated the damage from the event at $6.3 billion. However, this does not mean that all this money is gone forever.

After issuing the initial warning, Binance cancelled authorization for the affected address. It also contacted the police and blockchain investigators to help track down the stolen funds.

According to the exchange, any losses will be compensated from their SAFU reserves as well as from the company funds. The exchange will also issue a technical report once the investigation has finished. An updated proof of reserves will also be published once the security issues have been cleared.

Frozen is not recovered

The roughly $3 billion Binance has frozen is not the same as money recovered.

Tether CEO Paolo Ardoino reported freezing more than 1.567 billion USDT. Circle’s Jeremy Allaire confirmed freezing over 800 million USDC alongside law enforcement. Both amounts are included in Binance’s total.

Circle is closely tracking reports of a potential exploit involving Binance. In coordination with law enforcement, we have frozen more than 800M USDC associated with the incident and will continue supporting the investigation.

— Jeremy Allaire (@jerallaire) October 29, 2026

However, freezing stolen assets only prevents further transfers. It does not automatically return the money.

The timing of the asset freezes was critical. Bitquery showed that Ethereum wallets that had assets frozen within a week kept 59% of their USDT. After half a year, only 12% of the USDT is left.

The limits of asset freezes were clearly exposed during the Bitget hack in September. Cryptopolitan pointed out that Circle and Tether managed to freeze only $318,000 from $387.5 million that had been stolen. By that time, the money was already converted into other cryptocurrencies.

The clues investigators will weigh

Investigators have two questions to answer: first, how the hacker was able to allow the withdrawals, and secondly, what happened to the rest of the money.

The suspicion that a Binance laptop was compromised to open the door for the hacker gives investigators a place to start. But they still have to prove how the hacker managed to gain access to the laptop.

Another option worth looking into relates to EIP-7702. This Ethereum feature gives regular accounts the right to assign transactions to smart contracts.

As Binance Academy points out, hackers can take advantage of these permissions to empty wallets. However, Binance hasn’t connected EIP-7702 to the hack and has not confirmed whether or not it was used.

Prices slid as the news broke

The uncertainty quickly spread to cryptocurrency markets.

Reuters reported that Bitcoin fell to a six-week low of $77,646. Ether dropped to $2,238.76, its lowest level in two months. BNB also lost more than 8% over 24 hours, falling to $694.

The breach has also pushed this year’s security losses sharply higher.

According to CertiK’s dashboard, cryptocurrency losses reached $8.98 billion across 748 incidents in 2026. Binance alone accounted for $6.07 billion, or 67.6% of the total.

Private key compromise remained the costliest attack category at $6.22 billion, although other exploits occurred more frequently.

The figures show how a single major breach can dominate annual losses. TRM Labs recorded $2.87 billion stolen across nearly 150 hacks in 2025. The $1.46 billion Bybit breach alone accounted for 51% of that total.

Will SAFU and Proof of Reserves reassure?

Binance insists that user funds remain safe and promises to cover losses through its SAFU reserve and company funds.

But restoring confidence will take more than that assurance. Customers will be looking for answers in the promised technical report and updated Proof of Reserves. They will also want to know how much of the frozen $3 billion Binance can actually recover.

The hacker who perpetrated the alleged theft of $1.5 billion from Binance spread out over 18,270 BTC that were taken in the hack over 19 wallets within a matter of minutes, after which he did not move the cryptocurrency. It has been found on the blockchain that 17 of these wallets currently have precisely 1,000 BTC in them, while the other two have 832.5 BTC and 437.7 BTC, respectively.

It was done through the use of a peel chain, where parts of the stolen cryptocurrency were moved via new addresses. No wallet among the 19 had made an outbound transaction by 04:23 UTC on Friday.