Binance security issue prompts $2.54 billion in crypto freezes

A reported Binance security issue frozen funds total reached $2.54 billion, according to Binance and executives at stablecoin issuers Circle and Tether. The figure represents assets blocked from moving, not a confirmed loss or theft, a distinction that matters for investors trying to assess the scope of the incident.

Binance said it was investigating reports of a potential security issue. A spokesperson said customer funds were safe, while the exchange temporarily suspended trading on Binance Alpha, its platform for early-stage crypto tokens. Binance did not explicitly confirm that an exploit, or hack, had occurred, CNBC reported.

Did Binance confirm it was hacked?

No. Binance described the matter as a potential security issue under investigation. Changpeng Zhao, Binance's founder and former chief executive, said in a social-media post that the incident appeared to be a hack and that customer funds would be fully covered, but that was not an explicit confirmation from the exchange.

The reported freeze total is preliminary. Binance said $2.54 billion was the verified amount frozen at that point, while the individual disclosures use qualifications such as “more than” and describe assets potentially connected to the incident.

Which firms froze funds tied to the Binance incident?

• Circle Chief Executive Jeremy Allaire said the company froze more than $800 million in USDC, its dollar-linked stablecoin.
• Tether Chief Executive Paolo Ardoino said Tether froze more than $1.5 billion in USDT that may have been connected to a potential breach.
• Binance co-founder Yi He said Ripple helped stop the movement of $200 million tied to the possible attack.

Those components broadly align with the $2.54 billion figure, though they do not amount to a final audited accounting. The freezes show a feature of issuer-controlled stablecoins: the companies behind USDC and USDT can block tokens at specified wallet addresses. Reuters reported in February that Tether had frozen about $4.2 billion in tokens connected to alleged illicit activity, largely since 2023.

That capability does not establish wrongdoing by the owners of every address frozen in this case. It does mean that stablecoin issuers can prevent tokens from being transferred while an event is being investigated.

How much crypto may have been affected?

Blockchain analytics firm Arkham Intelligence linked nearly $6 billion in digital assets across 55 wallet addresses to the potential exploit, CNBC reported. That estimate included bitcoin, ether, solana and stablecoins. It is an analysis based on public blockchain data and tips, not confirmation that all of those assets were stolen, lost or controlled by an attacker.

Markets moved lower after the statements. Bitcoin fell more than 3% to below $80,000, ether declined nearly 4% and solana dropped about 3%, CNBC reported. Circle shares were down about 5% in after-hours trading.

For now, the confirmed public record is narrower than the online speculation: several firms reported freezing assets connected to a possible Binance incident, Binance paused Alpha trading and said it was investigating. The exchange has not confirmed an exploit or disclosed a final amount affected.

This story draws on original reporting from CNBC.