Crypto Market Crash Deepens as $6.3B Binance Hack Hits Bitcoin

The crypto market crash intensified on October 30 after Binance disclosed a security incident affecting approximately $6.3 billion. Bitcoin briefly fell below $77,000 as Ether, BNB and XRP also declined.

Binance said partners had frozen around $3 billion in affected assets and promised to cover customer losses. Meanwhile, liquidations accelerated the broader cryptocurrency selloff.

Crypto Market Crash Sends Bitcoin Below $77,000

Binance, the world’s largest crypto exchange, suffered the largest hack in history this week, triggering panic selling among investors.

In separate statements, Changpeng Zhao and Binance confirmed the attacks. In a statement, Binance said that the security incident involved a compromised DevOps engineer’s laptop that allowed the attacker to gain access to a service container. The attacker was then able to submit unauthorized withdrawal transactions.

Binance says the hack was worth $6.3 billion. Of these, Circle and Tether have frozen $3 billion of them. It also maintained that users’ funds were safe and that the company would publish an updated proof of reserves.

Binance also temporarily suspended deposits and withdrawals and revoked the affected address authorizations. It has also engaged law enforcement agencies and blockchain intelligence partners to try and recover the funds.

However, recovering the unfrozen funds will likely not be possible. Following the attack, the hacker swapped the stablecoins for ETH and then borrowed assets on Aave. In a statement, Aave said it had paused new deposits and borrows and that all positions on the platform were overcollateralized.

Hack is the Biggest in the Crypto Industry

This Binance hack is a big story because of its role in the industry. It has millions of users worldwide and handles most transactions. Binance has also invested billions of dollars to protect its exchange over time.

As such, investors fear that if Binance can be hacked after doing all that, no exchange is safe. Fortunately for Binance, the company has billions of dollars in reserves that it can use to reimburse its users. According to DeFi Llama, the company has over $133 billion in assets.

The hack comes at a time when crypto hacks are becoming larger and more common. DeFi Llama data shows that over $26.9 billion has been hacked over time. In the last 12 months, hacks have grown to over $8.3 billion.

In addition to Binance, Bitget suffered a $387 million hack in September, while Liquid Network suffered a $320 million hack. Before that, companies like Drift Trade, Kelp, Balancer, and Tectonic were hacked.

Top crypto exchanges have suffered from hacks in the past. For example, Upbit suffered a $36 million hack in November last year, while Bybit suffered a $1.5 billion loss as hackers compromised the Ethereum network.

Is the Crypto Market Safe After the Hack

Now, the question among investors is whether the crypto market is safe after the Binance hack. Historically, these hacks tend to lead to lower confidence among investors.

However, history shows that the crypto industry does well when major black swan events happen. A good example of this was the Mt. Gox collapse in 2014. Since then, Bitcoin and other tokens have done well.

The same happened after the FTX collapse. At the time, FTX was one of the biggest crypto exchanges in the world with billions of dollars in assets. Its collapse occurred a few months after Terra‘s, resulting in billions of dollars in losses.

Analysts warn that these hacks will continue as AI models become more sophisticated. Companies like Anthropic and OpenAI have all reported of their models escaping and hacking.