Binance announces that it has covered losses from the hack. It spent over $6.34 billion on this

Binance announced that it had covered the assets affected by the October hack. According to the exchange, it has allocated over USD 6.34 billion for this purpose from its own treasury, part of the SAFU fund and part of the futures market insurance fund.

The stock exchange published a new reserve statement on November 12. The full cryptographic proof, which will allow checking the coverage of balances, is expected to be ready after approximately 40-50 hours of calculations.

The US Department of Justice reported that over USD 2.7 billion stolen from Binance has been frozen, and court approval has been obtained to seize or secure over USD 1.2 billion of this pool.

The amount of USD 6.34 billion comes from Binance. It is not the result of an independent loss audit.

Binance announced that it had covered the assets affected by the October hack. According to the stock exchange, more than $6.34 billion was allocated to cover losses. It also published a new statement of reserves, but announced additional time for full cryptographic verification. Separately, the U.S. Department of Justice reported action regarding over $1.2 billion stolen from Binance.

What Binance announced

In the exchange’s announcement on November 12, Binance declares that it will no longer cover the assets affected by the incident. It financed them from its own treasury, part of the SAFU fund and part of the futures market insurance fund, exceeding the required level of collateral. It also pledged to replenish the SAFU fund to approximately USD 1 billion. Payments are to resume in stages.

The new summary shows the state of reserves as of November 12 at 00:00 UTC. Binance reports that it includes 198 tokens. According to the announcement, generating the full cryptographic proof will take approximately 40-50 hours. Only after it is made available, users of the assets covered by it will be able to independently check their coverage.

What can be checked in the reserve certificate?

Proof of Reserves is intended to enable comparison of exchange assets with customer balances included in the statement. Binance describes on the reserves page how a user can check whether their balance has been included in the calculation.

Such control applies to specific assets and a specific moment. By itself, it does not provide a complete picture of all a company’s liabilities or assurance that funds will be available in the future. The PCAOB investor ombudsman’s office draws attention to the limitations of PoR reports and the difference from an audit in a warning of March 8, 2023.

When comparing cryptocurrency exchanges, you need to check the scope of published data. The value of reserves expressed in dollars also changes with the price of bitcoin and other assets. Simply listing the USD amounts is not sufficient to assess the coverage of balances in individual tokens.

How the break-in happened

The FBI dates the theft to around October 29. In an October 31 warning, it attributes it to a North Korean group known as TraderTraitor and cites losses of more than $6 billion.

Binance published its preliminary findings on November 3. In the incident report, she described, among other things: a false recruitment, during which an employee downloaded a task containing malicious code to a work computer. According to the exchange, taking over devices and permissions allowed attackers to reach wallet transaction signing operations. The details of this report are described in the text about fake recruitment in Binance.

This report puts the value of assets affected by the incident at approximately $6.34 billion. This is stock exchange data. The FBI gives a broader estimate of “over $6 billion,” without confirming the exact same valuation.

What the American justice system does

In a statement on November 12, the DOJ said that joint efforts by the authorities and the private sector led to the freezing of over $2.7 billion stolen from Binance. Of this amount, over USD 1.2 billion was subject to court consent for seizure or security. These are not two separate amounts that can be added together.

Binance, in an earlier report on November 3, cited approximately $2.85 billion in assets frozen or seized. It stipulated that the calculation was subject to negotiation and changes in market prices. The amounts come from different dates and describe slightly differently named activities. Without a detailed accounting of them, it is impossible to attribute the difference to a single cause.

Securing assets does not mean returning them to Binance or customers. DOJ reports that tracing, freezing, seizure and forfeiture activities continue. The announcement does not indicate to whom and when the funds will be transferred.

What is not known yet

There is no independent audit in the presented materials confirming full settlement of losses and replenishment of all assets. No complete valuation method was provided to compare the USD 6.34 billion with the value of the stolen tokens at prices at the time of the theft.

The next announced stage is the provision of full cryptographic evidence for the new reserve statement. Binance did not provide a start time for calculations. Counted from the moment of compilation, 40-50 hours pass between the afternoon of November 13 and the night of November 13-14, Polish time. The scope of the control will only be able to be assessed after the data is published.

What does this mean to you

If you keep funds on Binance, the exchange declares that it covered the losses after the hack with its own money and resumes withdrawals in stages. Once your crypto proof is ready, check the Binance reserves page to see if your balance is included in the November 12 statement. This check is for one moment in time and does not guarantee the security of your funds in the future. Cryptocurrencies you don’t need for current trading can be transferred to your own wallet. How to choose it is explained in the guide on which cryptocurrency wallet to choose.