CoinDesk
Binance’s Oct. 1 proof-of-reserves snapshot included Binance 14, a hot wallet at the center of Thursday’s suspected hack. About 204,500 ETH was taken from Binance wallets, a loss equal to roughly 5.6% of the exchange’s reported ETH reserves and enough to reduce estimated ETH backing from 100% to about 94% until assets are replaced.
Why it matters
Binance’s reserve reports compare assets held in exchange-controlled wallets with customer balances. The Oct. 1 snapshot showed exactly enough ETH to cover customer balances, leaving little reported cushion against the theft. The stolen funds also included stablecoins and smaller positions in ENA, UNI, PEPE and AAVE, which represented 7% to 15% of Binance’s reported holdings of those tokens.
Binance and co-CEO Yi He said user funds are safe, and founder Changpeng Zhao said he expects users to be fully recovered. That means the exchange says it will honor customer balances even though assets backing them were stolen.
Market impact
Issuers froze much of the stolen stablecoin haul. Tether’s CEO said more than 1.567 billion USDT was frozen; Zhao put Circle’s USDC freeze at around $823 million. Ripple froze around $200 million in assets, while World Liberty Financial froze $27 million worth of USD1. Binance’s SAFU emergency fund holds around $1 billion in bitcoin and could be used to offset losses.
Binance’s next reserve snapshot, dated Nov. 1, will show whether it has replaced the missing assets and restored reported backing. Until then, the gap between customer balances and the exchange’s reported ETH reserves remains the key measure to watch.
Frequently asked questions
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How much could Binance’s ETH backing fall after the wallet theft?
The roughly 204,500 ETH taken represents about 5.6% of Binance’s reported ETH reserves, potentially reducing estimated backing from 100% to around 94% until assets are replaced.
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Why does Binance 14 matter to the reserve figures?
Binance’s Oct. 1 proof-of-reserves snapshot listed Binance 14 among the wallets backing customer balances. The wallet was at the center of the suspected hack.
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What does Binance mean when it says user funds are safe?
Binance and co-CEO Yi He said user funds are safe. The exchange says it will honor customer balances even though assets backing them were stolen.
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How much of the stolen stablecoins has been frozen?
Tether’s CEO said more than 1.567 billion USDT was frozen. Zhao put Circle’s USDC freeze at around $823 million; Ripple and World Liberty Financial also froze assets.
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When will Binance’s next reserve snapshot show whether backing has recovered?
The next snapshot is dated Nov. 1. It will show whether Binance has replaced the stolen assets and restored reported backing.
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