- On 29 October 2026 attackers drained roughly $6.3bn in crypto assets from Binance hot wallets. Measured in dollars, it is the largest crypto theft in history.
- The entry point was a compromised engineer's laptop. On Ethereum the attacker abused EIP-7702, which made an exchange wallet execute the attacker's code without a new signature.
- Tether and Circle froze most of the stolen stablecoins. The attacker therefore converted USDT into ETH as fast as possible, including through a loan on Aave.
- The SAFU fund holds about $1bn. Binance covers the rest from a bitcoin reserve, its futures insurance fund and its corporate treasury. By 1 November it had replenished 95% of the stolen assets.
- Binance has no MiCA licence. A client in Slovakia therefore cannot rely on a statutory provider liability for losses, only on the exchange's voluntary commitment.
- Aave was not hacked, yet its guardians froze 292 markets the same evening. The incident showed who actually holds the emergency brake in "decentralised" protocols.
1. What happened
On Thursday 29 October 2026, shortly after 20:00 UTC, large amounts started leaving Binance wallets for unknown addresses. Seventeen hot wallets were affected. A hot wallet is an exchange's online wallet used to pay out ordinary client withdrawals. Exchanges keep most assets in offline cold wallets and move only what is needed for withdrawals into hot wallets. It works much like the till in a shop compared with the safe in the back room.
Binance estimates the damage at about $6.3bn. Analytics firm TRM Labs counted $6.36bn across ten blockchains, Chainalysis $6.4bn. The previous record was the theft from the Bybit exchange in February 2025, about $1.5bn. In September 2026 the Bitget exchange lost $387m according to early estimates.
| Blockchain | What the attacker drained | Value |
|---|---|---|
| Ethereum | 200,630 ETH and 185 other tokens including USDT and USDC | about $3.79bn |
| Bitcoin | 18,270 BTC | about $1.47bn |
| TRON | 612.7m USDT and 46.4m TRX | about $628m |
| XRP Ledger | 233.46m XRP | about $296m |
| Solana | 970,500 SOL | about $96m |
| Arbitrum, Optimism, Base | various tokens | about $39m |
| Avalanche | various tokens | about $28m |
| Polygon | various tokens | about $10m |
| Total | about $6.36bn |
Source: TRM Labs, 30 October 2026
| Time (UTC) | Event |
|---|---|
| 29 Oct, around 20:05 | attack begins |
| 29 Oct, 20:20 | a transaction carrying 50 EIP-7702 authorisations for the Binance 14 wallet |
| 29 Oct, 20:24 | about 167,464 ETH, 1.615bn USDT and some 60 other tokens leave the wallet, roughly $2.5bn in total |
| 29 Oct, 20:58 to 21:01 | the attacker deposits 60m USDT into Aave and borrows 19,762 WETH |
| 29 Oct, about an hour after the attack began | Tether and Circle start freezing attacker addresses |
| 29 Oct, 21:42 to 23:04 | Aave freezes 292 markets |
| 30 Oct, after midnight | Binance revokes the malicious delegation, almost four hours after it was set up |
| 30 Oct | Binance confirms $6.3bn in damage, Aave reopens its markets |
| 31 Oct | the FBI attributes the attack to the North Korean group TraderTraitor, Binance reports 90% of assets replenished |
| 1 Nov, 06:00 | first phase of withdrawals reopens, 95% of assets replenished |
Source: Binance, Chainalysis, TRM Labs, LlamaRisk, Cointelegraph
2. How they did it
The way in. According to Binance's first statement, the attacker got into its systems through the compromised laptop of a DevOps engineer, an employee or contractor who manages infrastructure. From there the attacker reached a service container and could submit unauthorised withdrawals. Binance later found additional points of breach. Co-CEO Richard Teng stressed that this was not a one-click attack but a more complex process in which the attacker used a self-destruct mechanism that wiped tools and traces along the way.
Binance says it found no evidence that a private key leaked. Security firm Blockaid points rather to misuse of the signing infrastructure. The difference matters. The attacker did not steal the key to the safe but reached the system that opens the safe on instruction, and fed it his own instructions.
EIP-7702 on Ethereum. Since the Pectra upgrade in May 2025, an ordinary Ethereum address can sign an authorisation that delegates its behaviour to smart contract code. The address looks the same from the outside, but when it receives an instruction it executes it according to that code. The feature has legitimate uses, such as batch payments or having someone else pay the fees. An authorisation is tied to the address's transaction sequence number, the nonce.
The attacker did not know the exact number. So a single transaction carried 50 authorisations for 50 consecutive numbers, from 18,914,775 to 18,914,824. Analysts call this nonce spraying. One authorisation matched and the Binance 14 wallet then executed the attacker's code. Within 3 minutes and 24 seconds about 167,464 ETH, 1.615bn USDT and some 60 other tokens left it. Further withdrawals required no new signature, because the delegation remained valid until Binance revoked it after midnight. According to Teng, the delegation "did not pass through our normal approval controls".
The authorisations had to be signed by the Binance wallet's key. TRM Labs therefore speaks of previously obtained signatures. The address that submitted them was funded through the Tornado Cash mixer, according to Chainalysis. On the other networks, Bitcoin, TRON, Solana and the XRP Ledger, the attacker used ordinary signed transfers to his own addresses. This also supports the conclusion that the attacker controlled the signing process rather than the keys themselves.
Who is behind it. TRM Labs and Chainalysis attributed the attack to TraderTraitor, a group linked to North Korea and often described as part of the Lazarus Group. The FBI confirmed this publicly on 31 October. The FBI had previously attributed the February 2025 Bybit theft to the same group. Chainalysis found that the Binance funds are being mixed with proceeds from the September attack on Bitget.
3. Tether and Circle: freezing the stablecoins
A stablecoin is a token whose value is pegged to a currency, most often the US dollar. USDT is issued by Tether, USDC by Circle. Both tokens run as smart contracts in which the issuer has built a blacklist, a list of blocked addresses. An address on that list can no longer send or receive the tokens. Nothing similar exists for bitcoin or ether, because they have no issuer who could intervene.
Both issuers acted quickly. According to Viacheslav Demchuk of AMLBot, this time freezing took them two to three minutes. Bitquery counted 11 attacker addresses that Tether blocked on Ethereum and TRON, but six of them were already empty. One address moved 130m USDT less than a minute before it was frozen.
| Who froze | What and how much |
|---|---|
| Tether | more than 1.567bn USDT (according to Tether's CEO) |
| Circle | more than 800m USDC (according to Circle's CEO) |
| World Liberty Financial | 27m USD1 and 2m WLFI |
| Arbitrum Security Council | $30.5m in ARB and ETH, moved to an intermediary address |
| Ripple, First Digital | RLUSD and FDUSD, amount not disclosed |
| Total according to Binance | about $3bn (as of 30 October) |
Source: issuer and Binance statements via Cointelegraph. Figures differ between sources, we quote the companies' own statements.
Frozen does not mean returned. The tokens remain at the attacker's address, he just cannot move them. Returning them usually requires cooperation with law enforcement or a court order. Binance did not count the frozen funds towards covering the loss and is covering it in full.
The case has a paradoxical side. Part of the crypto community has long criticised an issuer's power to freeze an address as a denial of the idea that nobody controls your funds. This time that very power blocked most of the roughly $3.3bn in stolen USDT and USDC. The same tool, however, can be used against any other address. In the EU the two coins are also in different positions: USDC meets the MiCA requirements, USDT does not, which is why licensed platforms restrict it for EU clients.
4. The escape: from USDT into ETH and out through Aave
The attacker knew stablecoins could be frozen. So he converted them as quickly as possible into assets nobody can block, above all ETH. Price was not a concern.
| Route | What he did | Amount |
|---|---|---|
| decentralised exchanges (Uniswap, UniswapX, 1inch Fusion, SunSwap) | swapped USDT into ETH and TRX before the freezes | about 729m USDT |
| market makers | sold USDT for ETH at about $2,650 per coin against a market price of $2,300 to $2,350 | about 325m USDT for 122,300 ETH |
| Aave | deposited USDT as collateral and borrowed ETH | 60m USDT, $44.6m loan |
| JustLend (TRON) | deposited USDT into a lending protocol, next steps unconfirmed | about 300m USDT |
| decentralised exchanges | sold UNI, LINK and AAVE tokens for ETH | not disclosed |
Source: Bitquery, TRM Labs, Chainalysis, LlamaRisk
Why Aave. Aave is a decentralised lending protocol. A user deposits collateral and can borrow another asset up to a certain share of its value. That share is called LTV (loan-to-value). If the collateral's value falls below a set threshold, anyone can liquidate the position, repay the debt and take the collateral.
Between 20:58 and 21:01 UTC an attacker address deposited 60m USDT into Aave and borrowed 19,762 WETH worth $44.6m. He does not have to repay the loan and presumably does not intend to. In practice he "sold" USDT that could be frozen at any moment for ETH, losing about a quarter of the value. On top of that, the deposited USDT no longer sit at his address but in Aave's shared contract, mixed with other users' deposits. An issuer can freeze an address, not specific coins inside a shared contract. Blocking the entire contract would hit every Aave user. According to LlamaRisk, which assesses risk for Aave, the attacker's position remained sufficiently collateralised: $59.9m of collateral against $43.8m of debt. Depositors were therefore not at risk of loss.
Laundering. Chainalysis observed thousands of automated transactions on TRON in a short time. New addresses first received exactly 1 TRX for fees and only then larger amounts, which sometimes returned to earlier addresses. Chainalysis speaks of "never-seen-before" laundering patterns. According to analyst ZachXBT, funds from Binance and Bitget met at a single address linked to THORChain, a cross-chain swap protocol. On 31 October THORChain paused most swaps after an Ethereum chain reorganisation caused it to refund a 10 ETH deposit twice. The pause indirectly delayed the laundering of the stolen funds as well.
The attackers have not been caught and most of the stolen ETH and BTC remains under their control. As of the morning of 30 October, Bitquery saw about $3.2bn across 19 attacker addresses, including 508,621 ETH and 18,270 BTC. By then it had not recorded transfers to known exchanges, mixers or bridges. The FBI expects further laundering attempts. Nobody can freeze ETH or BTC. What remains is address tracking and cooperation from exchanges, which can block deposits from flagged addresses.
5. How Binance is covering the loss
SAFU (Secure Asset Fund for Users) is an emergency fund Binance set up in 2018 and financed with part of its trading fees. It is worth about $1bn. Since 2026 Binance has held it in bitcoin, and if its value falls below $800m, Binance tops it back up to $1bn from its own reserves. Against a $6.3bn loss, SAFU therefore covers roughly one sixth.
Binance has set aside more than $6.34bn of its own funds. According to Reuters, the money comes from a combination of these sources:
| Source | What it is |
|---|---|
| part of the SAFU fund | emergency fund for users, about $1bn in BTC |
| bitcoin reserve | the exchange's own BTC |
| part of the futures insurance fund | a fund covering losses from liquidations of leveraged positions that the market fails to absorb |
| corporate treasury | Binance's own assets, a large part of its profit being held in crypto assets |
Binance already held about $5bn in the same tokens the attacker stole. It is buying the rest on the market and through OTC trades, directly from counterparties outside the exchange. By 31 October it had replenished 90% of the stolen assets, by 1 November 95%. The missing 5% consists of less liquid tokens outside the top ten.
Withdrawals were paused from the evening of 29 October. The first phase of reopening began on 1 November at 06:00 UTC and covers BTC, ETH, USDT, USDC, BNB and XRP on 15 networks. Other networks reopen gradually once they pass security checks. Binance also published a proof of reserves snapshot as of 31 October. According to it, ten main assets (BTC, ETH, USDT, BNB, SOL, USDC, XRP, USD1, RLUSD and ZEC) are backed at least 1:1. Binance announced the full report for 2 November.
"Our users will not bear the financial impact of this incident," Richard Teng wrote. Binance founder Changpeng Zhao summed it up as "It hurts, but we survive." The market reacted relatively calmly. Overnight into 30 October bitcoin traded around $76,900 (−4.9% over 24 hours), BNB lost 8%, ETH 5.7% and AAVE 11.3%. The Fear & Greed sentiment index fell to 30, its lowest since August. The decline also coincided with a broader sell-off on financial markets.
The statement that client funds were not affected deserves one clarification. On a centralised exchange a client does not own specific coins but has a claim against the exchange to deliver them. The stolen funds are a loss of the exchange as debtor. Whether clients lose anything depends on whether the exchange can cover the damage. This time Binance could. In September Bitget covered a $387m loss from a protection fund of more than $464m. Clients of FTX in 2022 and of Mt. Gox in 2014, however, waited years for their funds.
6. Binance without a MiCA licence: what would be different
Binance does not hold a crypto-asset service provider (CASP) authorisation under the MiCA regulation in any EU member state. As of 30 October 2026 it is not on the ESMA register. It withdrew the application filed in Greece in January 2026 on 24 June and announced that it would obtain authorisation in another member state, without confirming which one. It serves EU clients by relying on so-called reverse solicitation under Article 61 MiCA, an exemption for a client who sought out the service on their own initiative. ESMA interprets this exemption narrowly. According to the Financial Times, some services for European clients run through a Binance entity regulated in Abu Dhabi, and European authorities have requested information from Binance.
A MiCA licence would not have prevented the hack. Nor would capital requirements have covered $6bn of damage. The difference lies in who bears the risk when the provider cannot or will not pay.
| Protection | Licensed CASP under MiCA | Binance for a client in Slovakia |
|---|---|---|
| liability for losses from an incident | a custody provider is liable for the loss of crypto assets from an incident attributable to it, up to their market value at the time of the loss (Art. 75(8)) | a voluntary commitment that depends on contractual terms and the exchange's financial strength |
| segregation of client assets | clients' crypto assets are legally segregated from the provider's estate and its creditors have no recourse to them, including in insolvency (Art. 70 and Art. 75(7)) | does not follow from EU law |
| cyber security | ICT risk management, testing and incident reporting under the DORA regulation (2022/2554) | outside the supervision of EU authorities |
| supervision | a national authority, in Slovakia Národná banka Slovenska, and ESMA | a regulator outside the EU |
| capital | at least €50,000 to €150,000 depending on the service, or a quarter of annual fixed overheads (Art. 67) | does not follow from MiCA |
With a licensed CASP the client has a legal claim against an EU entity and their assets are segregated from the firm's estate. With Binance, this time, it is goodwill backed by a large balance sheet. Had the same attack hit a smaller unlicensed exchange, its clients would have ended up in the position of FTX creditors. How to check whether a platform holds a licence is explained in the article on the end of the MiCA transition period. For long-term holdings, self-custody, for example a hardware wallet, is an alternative. It does, however, shift responsibility for the keys to you.
7. What it means for decentralised platforms
Aave was not hacked. Its contracts worked as intended and the attacker's position was collateralised. Even so, within ten minutes of the first reports an emergency group formed: Aave Labs, the firms TokenLogic and Certora and other security partners. The decision was executed by the guardians, administrators with emergency powers whose transactions must be signed by several members at once (multisig). Between 21:42 and 23:04 UTC they froze 175 markets on Aave V3 across 16 networks and 117 markets on Aave V4 across four networks, 292 in total. A token-holder vote on changing parameters would have taken about five days. The freeze stopped new deposits and new loans. Debt repayments, withdrawals subject to available liquidity and liquidations continued.
For ordinary users this had concrete consequences. With deposits halted and withdrawals continuing, utilisation and with it interest rates rose. USDC on Aave V3's main market was 97.8% utilised at a 10.8% rate, and on the Monad network the rate reached 20.2%. Borrowers could not add collateral to frozen markets to move away from liquidation. Aave's GHO stablecoin briefly slipped to $0.997 and the AAVE token lost 9 to 11%.
The markets reopened on 30 October. For nine assets, however, Aave set LTV to zero, so they cannot be used for new loans: USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUt, PAXG and OP. It cut borrowing caps by about $3.8bn in total. The USDT cap on the main V3 market, for example, fell from 3.09bn to 2.56bn. Other protocols were cautious too. Kamino on Solana temporarily paused lending in some markets and the Arbitrum Security Council froze $30.5m.
Decentralisation has an emergency brake. Formally, Aave is governed by token holders, but in the crisis a small group of administrators with emergency powers acted. The intervention was fast and probably prevented further damage. It also showed where the real point of control lies. Paul Frambot, co-founder of the competing Morpho protocol, therefore defends isolated markets with parameters fixed at creation. Marc Zeller from the Aave community counters that isolation does not protect lenders inside a failing market. MiCA does not apply to fully decentralised services (recital 22). This case, however, shows how thin the line is between a "fully decentralised" and a "managed" protocol.
A stablecoin as collateral carries issuer risk. A protocol that accepts USDT or USDC as collateral also relies on decisions by Tether and Circle. Several of the assets whose collateral capacity Aave removed after the incident are tokens of central issuers with a freeze function.
DeFi as an exit route. The attacker used Uniswap, 1inch, Aave, JustLend and THORChain. Pressure from authorities to filter flagged addresses, both in web front ends and in the protocols themselves, can be expected to grow. Standard Chartered analyst Geoffrey Kendrick also expects the hack to shift some trading from centralised to decentralised exchanges. According to CoinGecko, decentralised exchanges accounted for about 23.5% of spot trading volume relative to centralised ones in the second quarter of 2026. This case shows, however, that decentralised platforms are not insulated from the consequences of a hack either.
8. Tax aspects in Slovakia
- A Binance client whose balance the exchange kept whole has no taxable event from the incident. Their crypto assets were neither sold nor exchanged.
- Moving funds from Binance to your own wallet or another account of yours is neither a sale nor an exchange, so it is not taxable. A withdrawal fee paid in crypto, however, is an exchange of a crypto asset for a service. Transfers have to be matched in your records, otherwise they are easily taxed as sales by mistake.
- Download your transaction history now, while the account is fully functional. A platform without a MiCA licence may further restrict services for EU clients, and without an export the acquisition cost is hard to prove.
- If a client lost crypto assets without compensation, a theft is neither a sale nor an exchange under Section 8 of the Slovak Income Tax Act. No income arises and the acquisition cost of the stolen crypto assets cannot be claimed as an expense against gains from other sales.
Frequently asked questions
Did Binance clients lose money in the hack? According to Binance, no. The attack hit the exchange's hot wallets and Binance is covering the loss from its own resources. By 1 November it had replenished 95% of the stolen assets and is gradually reopening withdrawals.
How much of it does the SAFU fund cover? The SAFU fund holds about $1bn, roughly one sixth of the loss. Binance covers the rest from a bitcoin reserve, part of its futures insurance fund and its corporate treasury.
Does Binance have a MiCA licence? No. As of 30 October 2026 it is not on the ESMA register. It withdrew its Greek application in June 2026 and serves EU clients by relying on the exemption for services provided at the client's own initiative.
Is moving crypto from Binance to my own wallet taxable in Slovakia? No. A transfer between your own wallets and accounts is neither a sale nor an exchange. Only a fee paid in a crypto asset is taxable, because it is an exchange of a crypto asset for a service.
Can a loss from stolen crypto be claimed in a Slovak tax return? No. A theft is neither a sale nor an exchange under Section 8 of the Income Tax Act, so the acquisition cost of stolen crypto assets cannot be claimed as an expense against gains from other sales.
Why did Aave freeze its markets if it was not hacked? The attacker borrowed ETH on Aave against stolen USDT. Administrators with emergency powers halted new deposits and loans so that this could not be repeated on a larger scale. Repayments, withdrawals and liquidations kept working and the markets reopened the next day.
This article is a general overview, not individual tax or investment advice. The basics of crypto taxation are covered in the article Crypto taxation in Slovakia.
The article reflects the situation as of 1 November 2026. The investigation is ongoing and figures may be refined. Sources: statements by Binance and Richard Teng, TRM Labs, Chainalysis, Bitquery, LlamaRisk, Aave, Reuters, Fortune, CoinDesk, Cointelegraph, Bitcoin.com, crypto.news, the ESMA register as of 30 October 2026, Regulation (EU) 2023/1114 (MiCA), in particular Articles 61, 67, 70 and 75, Regulation (EU) 2022/2554 (DORA), Slovak Act No. 595/2003 Coll. on Income Tax, Section 8.