Cryptocurrency exchange Binance has completed refunding customers for all digital assets stolen by hackers in the largest incident of its kind in history. The company used more than $6.34 billion of its own funds to compensate for the damage. The refund took a little longer because the company had to purchase rare tokens.
Image source: Binance
Po data exchanges, three sources were used to cover the damage: part of the reserve “Secure Asset Fund for Users” or SAFU, in English (Secure Asset Fund for Users), funds from the insurance fund for trading futures (Futures Insurance Fund) and corporate treasury. The missing tokens were purchased on the open market and through over-the-counter transactions. This approach made it possible to restore collateral in exactly those cryptocurrencies that were affected by the attack, and not simply compensate for their value in cash. Binance also promised to top up SAFU to approximately $1 billion to keep it as a separate reserve to protect users.
At the same time, Binance updated its Proof of Reserves (PoR) system, which covers 198 tokens and allows users to verify the availability of reserves that meet the exchange’s commitments to customers. In this way, the exchange increases the public’s ability to audit its reserves, although this cannot be considered an independent audit of all of a company’s financial obligations.
According to Binance’s investigation, hackers used a fake interview to compromise the company’s computer and internal AI tool. This allowed them to gain control of hot wallets and withdraw funds worth $6.34 billion. The attack is associated with a hacker group allegedly in contact with organizations from North Korea.
The attack took place on October 29. By November 1, Binance was able to recover 95% of the tokens stolen from it and began withdrawing funds. But it took another ten days to find and purchase rare and low-liquidity tokens. Binance promises not to pass on the costs of purchasing tokens to customers.
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