Cryptocurrencies Pare Losses After $6.3 Billion Hack Spooks Markets — Update

By Fabiana Negrin Ochoa and Amanda LeeCryptocurrencies pared losses following a dramatic drop at the start of the Asia session, sparked by news of what is likely to be the biggest-ever crypto heist.Bitcoin and Ethereum clawed back some ground Friday after tumbling over 3% each in the wake of news that Binance, the world's biggest crypto exchange, suspended transactions to investigate a major security breach.In posts on X, Binance said that the hack totaled around $6.3 billion, and that it froze about $3 billion in assets with the help of blockchain partners."User funds are safe. Binance will cover all hacking losses," Binance co-founder Yi He said on X.Industry players including stablecoin providers Tether and Circle moved quickly to stem the fallout.Brian Armstrong, chief executive of exchange Coinbase, said his team was assisting with the response, including blocking transfers to compromised wallets."Coinbase is safe," Coinbase Chief Technology Officer Rob Witoff said on X. "We're monitoring price volatility, tracking stolen funds onchain and remaining vigilant as ever."The incident follows a recent security breach at crypto exchange BitGet, reviving fears about digital safety as more real-world assets move on-chain.The extent of the fallout on the crypto industry remains to be seen, hinging on a number of factors that aren't yet clear.Cristiano Ventricelli, vice president of decentralized finance and digital assets at Moody's Ratings, said the broader credit and industry implications will depend on the ultimate losses, affected counterparties, asset recovery and, importantly, whether the incident leads to wider disruption or loss of confidence across the digital-asset ecosystem.Binance said its initial investigation suggested the breach may have involved a compromised laptop that allowed an attacker to make unauthorized withdrawals. It said it hadn't found any evidence of a leak of the private keys used to access crypto wallets. Deposits remain unaffected."We expect to resume [withdrawals] within 48 hours, and will update with further details," Binance said.The quick industry reaction to the hack seems to have calmed the initial angst, giving crypto coins some breathing room."Long-term market confidence will depend largely on how effectively the incident is resolved, how well users are protected, and how transparently the findings are communicated," said Ronghui Gu, co-founder and chief executive of CertiK, a blockchain security auditor.Prior to Friday's turbulence, the "crypto winter" had been thawing, as institutional demand and regulatory tailwinds helped counter an unfavorable macro backdrop characterized by volatile oil prices, elevated bond yields and expectations of higher interest rates.Still, longer-term drivers such as the institutionalization of digital assets remain intact, suggesting that any price pullbacks could offer buying opportunities.The selloff looks relatively contained given the size of the Binance hack, said Nic Puckrin, founder at Coin Bureau. The resilience of crypto assets is particularly notable given the massive selloff in technology stocks, he added.Bitcoin was last down about 1%, paring some losses but staying below the closely watched $80,000 line. Ethereum was 1.2% lower at $2,231 as the Binance fallout compounded existing outflows. Solana was up 0.9% and Ripple reversed losses to sit 1% higher, according to LSEG data."We'll have to keep an eye on what happens over the next 24 hours," Puckrin said.Write to Fabiana Negrin Ochoa at [email protected] and Amanda Lee at [email protected]