- Binance user funds are reportedly safe after a $6.3 billion hack because the exchange segregates their holdings in cold wallets.
- Only the hot wallets the exchange utilizes to facilitate user withdrawals were compromised.
- Around half of the stolen funds are already frozen and under recovery proceedings.
- The company plans to further cover the losses with its SAFU program and SpaceX shares.
Binance, the world’s largest crypto exchange by trading volume, became the latest victim of a hacking incident on Thursday. The culprit drained $6.3 billion, triggering major investigation and recovery efforts not only by the company but also across industry stakeholders.
Despite the massive scare the incident caused for Binance users, the company, including co-CEOs Richard Teng and Yi He, assured them their funds are safe. Even former CEO Changpeng “CZ” Zhao echoed the same assurance.
Binance User Funds in Cold Wallets are Safe
Crypto in America’s Eleanor Terrett highlighted that the multi-billion hack didn’t affect customer funds. Citing the statement of an unnamed Binance spokesperson, she explained that the assets the hacker drained were in the exchange’s hot wallets, the same ones it uses to facilitate user withdrawals. Meanwhile, the platform says it keeps its holdings securely in cold wallets and moves assets into internet-connected wallets only during cash-outs.
“Most of what we earn from day-to-day operations is held in crypto assets. We have kept a lot of them in the company, and reinvested them—into the business, and into security,” said the spokesperson. “Because we believe in crypto, and in the long-term value of this industry.”
The representative emphasized that Binance’s strict segregation system lets it absorb a loss immediately, because it comes only from its own money.
Covering the Gap
Binance’s confidence amid the situation comes from its SAFU (Secure Asset Fund for Users) program and recovery progress. CZ confirmed that the company has more than $1 billion in the SAFU, which it designed to cushion the impact of untoward incidents like the recent cybersecurity exploit.
On the other hand, the institution has made significant progress in freezing about $3 billion of the compromised assets, comprising nearly half of the stolen funds. Combined with SAFU, it reduces the shortage to $2 billion.
Interestingly, CZ hinted that Binance is considering selling over $1 billion worth of SpaceX (SPCX) shares to further close the gap to around $1 billion. The move comes hot on the heels of SpaceX CEO Elon Musk’s grimacing face emoji, which the former Binance CEO and other bigwigs at the exchange perceived as trolling in response to the hacking incident.
The former Binance CEO claimed he has a lot of respect for Musk, but his trolling comes at a bad time. He asked the American billionaire to show a little support instead.
The crypto exchange notably acquired the shares from its $500 million investment in Musk’s Twitter takeover, which he renamed X.
