Binance co-founder Changpeng Zhao said on Thursday that large outflows from the exchange’s hot wallets appear to be a hack, and that customer funds remain safe. The transfers sent crypto prices sharply lower.
Zhao, widely known as CZ, wrote “User funds are safe” in a post on X and described the activity as a hack on Binance. In the same post, he thanked Tether and Circle for freezing funds linked to the outflows. Zhao stepped down as Binance’s chief executive officer (CEO) in November 2023 and no longer runs the exchange. He said that, as a shareholder, he expects any affected user funds to be fully covered.
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Binance Says It Is Still Investigating
Binance itself was more cautious. In a statement on X, the exchange said its teams are actively investigating reports of a possible security issue. It added that it has not confirmed that user funds have been affected. It also warned users to ignore unofficial links, messages, and requests for account information.
About five minutes later, Binance posted an updated statement saying that user funds are completely safe. The exchange said its security teams are reviewing all relevant information with urgency and will share updates through official Binance channels once the information is verified.
Binance has not formally confirmed a breach. The exchange said it is investigating a potential security issue and that user funds remain completely safe, while withdrawals are temporarily paused for security checks. Co-CEO Yi He stated, “User Funds SAFU,” and thanked Ripple for freezing approximately $200 million.
What On-Chain Data Shows
A hot wallet is an exchange wallet that stays connected to the internet so it can process withdrawals. At 20:24 Coordinated Universal Time (UTC) on October 29, a single transaction moved about 167,464 Ether (ETH), roughly $1.6 billion in USDT and dozens of other tokens out of the Binance 14 wallet to a newly created address. At 20:41 UTC, another 780 million USDC left a wallet labelled Binance Hot Wallet 34 for the same recipient.
On-chain researchers said the address that started the transfers was funded through Tornado Cash, a crypto mixer that hides where funds come from. The receiving address later forwarded about 195,460 ETH to another fresh wallet. Estimates of total outflows across several blockchains range from about $2.5 billion to more than $3.3 billion. Binance has not confirmed these figures.
Some analysts first said that routine wallet maintenance could not be ruled out.
Tether and Circle Freeze $1.79 Billion
In his first post, CZ put the freezes at about $971 million in Tether (USDT) and about $823 million in USD Coin (USDC). Tether CEO Paolo Ardoino later said the company had frozen more than 1.567 billion USDT related to a potential Binance exchange hack. He added that protecting the industry and Tether’s partners is the company’s main priority. CZ shared Ardoino’s post and called the freeze a “life saver.”
Circle CEO Jeremy Allaire said Circle is closely tracking reports of a potential exploit involving Binance. He said that, in coordination with law enforcement, Circle has frozen more than 800 million USDC associated with the incident and will continue supporting the investigation. CZ thanked Allaire in a separate post. Together, the two issuers’ figures put the frozen stablecoins at more than $2.3 billion.
Both issuers can blacklist addresses at the token contract level, which stops the frozen tokens from moving. Ether and most other tokens in the transfers cannot be frozen this way.
Tether used the same mechanism last week when it froze about $2.2 million in USDT tied to the CoinDCX wallet outflow.
Market Reaction
The reports hit prices quickly. About $628 million in crypto futures was liquidated in one hour, with about $607 million of that coming from long positions. A liquidation happens when an exchange forcibly closes a leveraged trade after losses wipe out the trader’s margin.
Bitcoin (BTC) briefly fell below $79,000, and Ethereum dropped under $2,240. Binance’s native token, BNB, fell as much as 9%.
What Comes Next
Binance has not yet released a loss figure, a root cause, or a timeline for its review. Zhao has previously warned users that no wallet is fully secure. Next, traders will be watching for Binance to confirm the cause, for the size of any unfrozen balances, and for whether SAFU is used to cover losses.
Update (10:45 PM UTC): The official Binance handle on X shared that the team is working on security checks and “withdrawals will resume as soon as the security issue is fully resolved.”