Traders are currently maintaining their trust in the world's largest cryptocurrency exchange after Binance suffered a $6.3 billion hack; however, major investors may become more wary of cryptocurrency as security concerns come into focus.
Binance customers yanked a net $3.64 billion from the platform over 9-1/2 hours on Sunday, when it partially resumed withdrawals. Withdrawal levels are an early test of trust, and Binance said the net outflow was 2.1% of assets, while analysts characterised it as fairly modest.
"Our top priority right now is to ensure the environment is secure, after which users can withdraw their funds, and Binance can resume operations," Binance co-CEO Yi He said in a post on X on Monday.
Bitcoin and other cryptocurrencies also stabilized, and volumes rose across a market where investors are still reeling from what could be the biggest ever financial heist.
The exchange was attacked on Thursday night in a raid the U.S. FBI and analysts have pinned on North Korean hackers.
Binance said it was covering the losses and has already raised $6 billion to do so from its corporate treasury, an insurance fund and a fund set aside for security breaches.
"It has not yet triggered widespread panic or a massive, concentrated withdrawal," said Tim Sun, a senior researcher at HashKey Group, a digital asset financial service company in Hong Kong.
"However, the blow dealt to market confidence by this incident likely extends far beyond the stolen assets ... rather, concerns over security will affect the allocation levels of market makers, institutions, and various investors alike."
Binance, which says it has more than 335 million global users and an average daily volume of $95 billion trading digital assets and derivatives, also moved to reassure customers.
"After an initial spike, withdrawal volumes have declined and are stabilizing," Binance said on X, noting $1 billion in deposits had flowed in against about $4.6 billion in outflow on Sunday.
Traders told Reuters they were keeping their accounts.
"I would not necessarily withdraw everything from Binance, because centralized exchanges continue to play an important role in liquidity, trading and market access," said Jay Koh, vice president of the Asia Web3 AI Association, a blockchain advocacy group based in Singapore.
Ryan Tan, a Binance user, said that he was in no hurry to withdraw his funds from the platform, as he had already kept his account fairly light since the collapse of another crypto exchange, FTX, four years ago.
"After the FTX collapse, I decided to hold everything in my wallet instead of leaving them on exchanges," said the 39-year-old.
After hitting a six-week low on Friday, bitcoin prices recovered through the weekend to trade above $78,000 on Monday, while ether also lifted from a two-month low.
Stablecoin market capitalizations, which can be a proxy for money moving in and out of cryptocurrencies, have fallen since Friday, suggesting some flow to cash or traditional assets.
Binance said withdrawals had resumed for bitcoin on the bitcoin network and for ether and some dollar stablecoins on the Ethereum network, though its website still showed withdrawals remained partially suspended for most cryptocurrencies.
The Binance theft adds to a string of recent crypto thefts and is the latest and largest to be blamed on North Korea.
The FBI said on Saturday that the North Korean state-sponsored unit known as TraderTraitor was responsible for the attack, an outfit researchers describe as experienced, highly capable and which funds the country's weapons programs.
The scale and profile of the attack on Binance probably puts the brakes on institutional crypto buying for a while, analysts said, a trend some traders had hoped would boost prices.
Spot bitcoin ETFs, a vehicle favoured by some big investors, shed $643 million on Friday, the largest daily outflow of October, and more than $1.3 billion in leveraged positions were liquidated, according to Ari Redbord, global head of policy at U.S. blockchain analytics firm TRM Labs.
"Those figures point to investors reducing risk," he said.
"A hack at a crypto exchange is bank robbery at the speed of the internet, which creates an unstable risk profile for anyone responsible for other people's capital."
About half of the stolen funds were in stablecoins and have been frozen by issuers including Circle, which said on Monday it had frozen more than $1.1 billion in USDC.
Jonathan Benton, founder and chief executive at crypto asset recovery firm iSanctuary, said the technology exists to trace stolen funds, but the challenge is turning that intelligence into rapid, coordinated action before those assets disappear.
"The future of crypto won't be decided by how much money enters the market, but by how safe that money is once it's there," said Benton, former head of the international corruption unit of the U.K.'s National Crime Agency.
