- The stolen crypto backed customer balances. The hacked wallet, labeled “Binance 14,” appears in Binance’s Oct. 1 proof of reserves, when it held 1.26 billion USDT and 89,475 ETH among 37 assets, according to a CoinDesk review.
- Ether backing slipped below 100%. Binance held exactly enough ETH to cover customers on Oct. 1, so the roughly 204,500 ETH taken, about 5.6% of its ETH reserves, would leave ether backing near 94%.
- The bitcoin haul is sitting still. The attacker split 18,270 stolen bitcoin, worth about $1.4 billion, into 19 wallets, 17 of them holding exactly 1,000 BTC, and none had moved as of 04:23 UTC Friday.
- Institutions are pulling funds. Institutional investors are rushing to withdraw digital assets from centralized exchanges after the hack, according to people familiar with the matter cited by CoinDesk.
What Happened?
CoinDesk’s review found the attacker used an Ethereum feature called EIP-7702 to turn the Binance 14 wallet into a sweeper that forwarded incoming funds to the attacker. The attacker’s smaller positions, including ENA, UNI, PEPE and AAVE, represent 7% to 15% of Binance’s reported holdings of each token. Stablecoin issuers have frozen much of the haul: Tether froze more than 1.567 billion USDT, Ripple about $200 million in assets and World Liberty Financial $27 million of its USD1 stablecoin.
Why It Matters?
Proof of reserves was meant to show customer assets are fully backed, so a gap in key assets puts Binance’s pledge to cover losses with its own funds in focus. The fallout is spreading beyond Binance as institutions rebalance trading books, putting the security of assets held on exchanges back in focus. Even before the breach, CertiK recorded $1.28 billion in crypto hack losses in the third quarter, up nearly 56% from the prior quarter.
What’s Next?
Binance’s next reserve snapshot on Nov. 1 will show whether it has replaced the stolen assets. Investors will also track the 19 bitcoin wallets: after the $1.5 billion Bybit theft in February 2025, the same North Korean unit spent about 10 days converting stolen ether into bitcoin.
