A suspected security breach at Binance has raised questions about what happens to customers' money when a cryptocurrency exchange stops withdrawals. The world's largest crypto exchange suspended deposits and withdrawals while investigating the incident, saying $2.54 billion in digital assets had been frozen and promising to cover any losses.
The episode has once again brought exchange security into focus. Binance has more than 300 million registered users globally and reported about $160 billion in assets under custody in its 2024 annual report. The scale of its operations means the investigation is being closely watched across the cryptocurrency industry.
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For customers, the immediate concern is access to their holdings. Binance said withdrawals would resume once the security issue had been resolved. It also said user funds remained safe, although the investigation was continuing and the value of frozen assets could increase.
Why Has Binance Stopped Withdrawals?
Binance halted deposits and withdrawals as a precaution while its teams investigated a potential security breach. The exchange said it was conducting security checks, freezing funds and working with law enforcement agencies.
It also temporarily stopped trading on its Binance Alpha platform.
The exchange confirmed that $2.54 billion in assets had been frozen, but cautioned that the figure could rise as investigators traced additional funds.
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"We are working non-stop to resolve this issue. Binance will cover all losses," the company said in a post on X.
Co-founder Changpeng Zhao, who no longer runs the exchange but remains its largest shareholder, said the incident appeared to involve a hack. He expected customers to be fully covered, he said.
What Happens To Investors?
When an exchange suspends withdrawals, customers cannot move their cryptocurrency holdings out of the platform for the duration of the restriction.
Binance said the suspension was temporary and linked to its investigation. The exchange also assured customers that their funds remained safe.
However, the suspension means customers have to wait until the platform restores withdrawals before they can transfer their holdings. Binance said it would resume the service once the issue had been fully resolved.
The exchange has not established the final scale of the suspected breach in the information provided so far.
How Are Tether, Circle And Ripple Helping Trace The Funds?
The investigation has extended beyond Binance, with major cryptocurrency firms stepping in to freeze assets linked to the suspected breach.
Tether Chief Executive Officer Paolo Ardoino said the company had frozen more than $1.5 billion in USDT, its stablecoin. Circle Chief Executive Officer Jeremy Allaire said his company had frozen more than $800 million in USD Coin.
Ripple also helped stop the movement of roughly $200 million in related funds, according to Binance co-founder Yi He.
The amount frozen may not represent the full extent of the assets involved. Blockchain analytics firm Arkham Intelligence identified 55 wallet addresses associated with the potential exploit, holding nearly $6 billion in digital assets. This does not mean that the entire amount was stolen.
Binance said it was working with law enforcement agencies, token issuers and blockchain intelligence firms to identify and freeze additional funds.
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