Binance and the Biggest Crypto Heist Ever

On Thursday afternoon, rumors of a massive hack at the crypto exchange Binance started flying around social media. In Abu Dhabi, where Binance is based, it was the middle of the night. By that point, all of the company's executives and about 100 staff were on a conference call, trying to contain the damage. And as they are trying to understand what's happening, more and more money kept being taken out of the exchange. That's our colleague, Patricia Kelsman. It was like a trickling down effect of like, oh, my God, it's one billion. Oh, my God, it's three billion. Oh, my God. And I, you know, a lot of people probably wonder when it was going to stop. It's almost like someone's bleeding and you're kind of trying to make the bleeding stop. So what was going on? Binance, the world's largest crypto exchange. Got hacked. And those hackers were moving fast. 20 minutes later, six billion was already gone. Wow. So you're talking about 20 in 20 minutes. 20 minutes. All this money was drained from this exchange. Yeah. Not even a lunch break. The breach was unprecedented. The hackers took $6.3 billion in crypto. Some experts are saying it's the largest bank. And it's the largest heist in history. Big news in the world of cryptocurrency. It is a day of damage control for the largest cryptocurrency exchange in the world. It's thought to be the biggest hack in history. $6.3 billion worth of assets stolen from the world's largest cryptocurrency exchange, Binance. There's nothing novel about stealing crypto. Exchanges get hacked pretty regularly. There have been more than 300 incidents in total. But a lot of those thefts are from smaller exchanges. And they don't cost a lot of money. When this hack first crossed your radar, were you surprised to hear about it? I shouldn't be surprised to hear about it because it's happening often with a lot of crypto exchanges. But there is a level of confidence that you have about, you know, this exchange being by far the largest in the world. That you just expect it to be safer than the others. So I would say I was pretty surprised. There is also this kind of. Worrisome feeling that what happens now if the largest exchange in the world with all those resources wasn't able to protect itself. I think a lot of people are bracing for more hackings. There's this overall feeling of if you hold crypto in an exchange, you're not safe. Welcome to The Journal, our show about money, business. I'm Imani Moise. It's Tuesday, November 3rd. Coming up on the show, the record-breaking heist at Binance. In business, a wrong answer can cost you more than a slow one. That's why nine Fortune 10 companies now run on Claude for the work they want to get right. Safety and accuracy are not just line items for Anthropic. That's their whole mission. See how Claude can support your business at claude.ai slash the journal. This episode is supported by Anthropic, the team behind Claude. Binance is huge, and it does a lot of financial transactions. It's hard to overstate just how big Binance is in the crypto world. More than half of the crypto in circulation globally is on Binance. The exchange handled $34 trillion worth of trades last year alone. Binance has over 300 million customers. The second largest competitor of the exchange is way, way behind. It's also controversial. Regulators banned Binance from operating in the U.S. after the company and its co-founder, Cheng Pen-jiao, known as CZ, Closed captioning provided by the Amara.org community According to Binance, the hackers broke in by planting malware onto multiple computers. One Binance employee had been contacted for a job interview by a fake company. As part of the fake interview process, the employee downloaded what appeared to be an assignment, but it contained some malicious code. Once the hackers had gotten in, they were able to start siphoning money out of the crypto exchange. So the exchanges have like these wallets, think of them as kind of like virtual accounts. So it's like, let's say it's a massive business. It's a bank account holding a ton of money in form of crypto. What they do is like they find these wallets, these accounts, and transfer the money someplace else to other wallets, to other accounts. And those accounts are like outside the exchange. And once it gets to the outside and these wallets are now controlled by the hackers, they start moving the money fairly quickly. They start splitting money into different wallets and making lots of transactions. And split second and then move the amount of money like, you know, through all sorts of ways in order to make it a basically untraceable. As the money started streaming out of Binance inside the company, things moved quickly. Executives called in Binance's cyber investigators. They started identifying the funds that had been stolen. About half of it was in stablecoin. The other half was actually locked. And once that happens, the funds can't be used, kind of like when a bank freezes a stolen debit card. Eventually, they were able to freeze $3 billion out of the $6.3 billion. But since all the transactions on the blockchain are public, within 10 minutes of the hack, observers on social media had started to notice that Binance was missing billions of dollars worth of crypto. An ex-user named Spreek posted, quote, "Unconfirmed, but possibly massive Binance hack." Other people were paying attention too. People within the crypto world had nothing to do with Binance, detected something was going on, that there was money exiting the exchange in a way that was just like not normal. So there's a lot of chatter that's happening on X, thinking something's going on. What is going on? Like, is this a hack? With growing public attention, CZ weighed in with a post on X. He was quick to tell Binance customers that the company would pay for any losses. Zhao says, you know. It does look like a hack on Binance. It immediately says user funds are safe. They are making sure that it was like, since the beginning, very clearly, we will cover the losses. No one is going to lose money over this. A little while later, Binance's co-CEO, Richard Tang, echoed that message in a video he posted on X. I want to be clear, we are committed to covering all hack losses through our company funds. Your assets are safe. Another thing Binance did right away was to lock down its customer accounts. One of the ways of stopping the bleeding was to pause the withdrawals. That way, the hackers could not withdraw more money, right? It's never a pretty thing to see because that also means regular users who might be panicking about what is happening kind of get stuck. You know. It's also a way of making sure. Make sure that the users don't take their money out and suddenly becomes a run in the bank as well at the same time. A spokesperson for Binance said that the company worked with law enforcement and has put new security measures into place. Co-CEO Richard Tang also said that Binance is, quote, "committed to working with the industry to safeguard it from attacks like these." Those freezes of the stolen stablecoin and of withdrawals from Binance stopped the hackers. But by then, they'd made off with about $3.3 billion. And those hackers were busy hiding all that money. An analytics firm said that just under four days, so since the hacking happened, the funds that were stolen moved through 12,000 wallets in more than 40,000 transactions. And what's amazing about this is that this is like one transaction roughly every eight seconds. it's happening around the clock. So that's giving investigators this confidence to say that they automated this whole thing and they're probably just sitting back, relaxed and looking at the flows of crypto moving very quickly throughout all these wallets and ways that ultimately are meant to dissipate the crypto and make it almost impossible to kind of trace the crypto now. So who took all that money and what does it mean for Binance and crypto more broadly? That's next. It gives your job post a boost to reach quality talent faster. Plus, it can help put your job in front of exactly who you're looking for based on criteria you set. Like if you need certain skills or certifications. And it works. Sponsored jobs posted directly on Indeed are 95% more likely to report a hire than non-sponsored jobs. So spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at Indeed.com. slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs. This episode is brought to you by Workday. Guessing is for game shows, not your business, especially when your margin for error is zero. Workday is the enterprise AI platform for HR, finance and IT with a deep understanding of your organization's context and guardrails. So every AI action is permission aware, giving you accuracy 24-7 and the ability to not just get work done, but get it done right. It's a new Workday. On Saturday, the FBI published a list of more than 600 crypto wallet addresses linked to the Binance heist. The FBI said those addresses are closely connected to a North Korean hacking group. Experts in the crypto world, they are very quick to say this was North Korea. But since then, U.S. authorities came out and said that, yes, the hacking was done by North Koreans. And in particular, there is a North Korean state-sponsored cybercrime unit called Trader Trader. According to Patricia's reporting, the unit was created around 2016 by North Korea's spy agency. And since then, it's suspected to have done a number of hacks. Including stealing $1.5 billion in crypto last year. It's basically estimated that North Korea has stolen some $12 billion over the past few years just in crypto. That's insane. This is money that is going to their missile program. I think like U.S. officials have said, cybercrime funds basically half of North Korea's missile program. North Korea has denied it was behind the Binance hack. Today, Kim Yo Jong, the sister of North Korean leader Kim Jong-un, called the claim, quote, absurd rhetoric. She also said that the U.S. is spreading misinformation by pitting the blame on North Korea. From Binance's perspective, the money, wherever it is and whatever it's going to get used for, is gone. And the company doesn't really have recourse for getting the stolen money back. Binance did say it would pay everyone back. The question is, how will it? How will it do that? What the company does have is a big pile of money it calls a secure asset fund for users that it can dip into. Binance, because it's so wealthy of an exchange, is able to cover the losses. But nobody, there's no regulator that comes to Binance and says, you need to cover these losses or you need to set aside X amount of money every year to cover the losses. And that's what happens with banks, right? It's so highly regulated that one of the first things that regulators are doing is they're kind of forcing banks to do is to set aside money to cover for rainy days for anything that can happen to make sure that customers don't ultimately don't get hurt. It goes case by case in crypto exchanges. In the case of Binance, they say they are covering it. It's not a given. If you are a user at a smaller exchange, do not think that because Binance said it's covering its customers, you are going to be covered if your exchange gets covered. It's hacked. Do you think that this hack has had any impact on Binance so far? I mean, there's definitely a reputational damage. You know, this exchange that's supposed to have all these resources and be able to protect itself is not able to protect itself. I mean, that opens a Pandora box as to like what else could happen, right? Could it happen again? After having locked down its customer accounts, Binance allowed withdrawals to start again, on Sunday. Around 10 hours later, the exchange said it had seen about $4.5 billion in withdrawals. This morning, CZ posted on X that hourly deposits are exceeding withdrawals, suggesting the platform has stabilized. Crypto has been like really pushing towards mainstream adoption. You're seeing in the U.S. bills moving through Congress to try to legitimize this industry and normalize it, standardize it. Do you think that this news is a setback for those efforts? Yes. It is a setback to the idea that crypto can become mainstream. If I'm someone who never held crypto, who was thinking, oh, I'm hearing so much in the news about crypto, everybody seems to be making some money out of crypto, should I buy crypto? And then you start thinking, okay, well, I just heard $6.3 billion was stolen from the largest exchange. Do I want to have any crypto? If you remember like how money used to get stolen. I mean, you had to have people with guns coming in a branch, threatening people inside the branch, like somehow breaching a vault and then running with all this cash in bags. Crypto is so much easier, right? Like, I mean, why would you go through the headache of doing this and the danger of getting arrested when you can actually do it virtually, sitting in front of a computer, you know, stealing way more than you can ever. Be able to carry. You literally have a bot do it, almost like an AI agent. Exactly, which Patricia says, might make people ask how safe crypto really is. And I think right now, that's the biggest question that we have that's still unanswered, how people are going to think of holding crypto and even whether crypto is something that is safe. So I do think this is a massive setback for the idea that crypto. It's ready to become mainstream. That's all for today, Tuesday, November 3rd. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Angus Baric, Vicky Gehuang, Sam Kessler, Yusuf Khan, Alexander Osipovic, Caitlin Ostroff and Dr. Ghazal Yun. Thanks for listening. See you tomorrow. At Farmers, we go out of our way to keep you in the know. Like by singing everything for emphasis. That and by providing you with coverage on a page and easy to understand language. So you know what's covered and what's not. No confusing legalese that no one gets. In full transparency, we do have to put a disclaimer at the end of this ad, though. Just being honest. 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