Binance investigates potential security issue as stablecoin issuers freeze funds

Binance said Thursday it was investigating a potential security issue after large transfers from the cryptocurrency exchange raised alarm, while two stablecoin issuers froze more than $2.3 billion in digital currency linked to the incident. Binance said customer funds were safe but did not confirm that money had been stolen.

“Our teams are aware of reports of a potential security issue and are actively investigating. Rest assured that user funds are completely safe,” a Binance spokesperson said in a statement. The spokesperson said security teams were reviewing the information urgently, promised updates through official Binance channels once details were verified and urged users to remain cautious of scams.

Binance founder Changpeng Zhao went further than the company in describing what might have happened. “It does look like a hack on Binance,” he wrote on X. But the extent of any damage remained unclear, and Binance had not explicitly confirmed a theft.

Tether CEO Paolo Ardoino said on X that the stablecoin issuer froze more than $1.567 billion worth of its digital currency “related to a potential Binance exchange hack.” Circle CEO Jeremy Allaire said his company froze more than $800 million in USDC associated with the incident.

“Circle is closely tracking reports of a potential exploit involving Binance. In coordination with law enforcement, we have frozen more than 800M USDC associated with the incident and will continue supporting the investigation,” Allaire wrote on X. USDC, or United States Dollar Coin, is pegged to the dollar.

The freezes came as traders watched the transfers and sought clarity about their cause. The price of bitcoin fell 3.2% Thursday afternoon to below $79,000, The Guardian reported. Neither Binance’s investigation nor the statements from Tether and Circle established that the transfers were the result of a hack.

Binance is the world’s largest cryptocurrency exchange by trading volume. Hundreds of thousands of users buy, sell and store billions of dollars’ worth of digital currencies on its platform, according to NBC News. Unlike traditional bank deposits, funds held with cryptocurrency exchanges are not government-insured against losses, NBC News reported, potentially leaving reimbursement decisions to the exchanges.

Zhao, who stepped down as Binance’s chief executive in 2023, also sought to reassure customers. “As a shareholder, I expect all user funds will be fully covered,” he wrote, adding that user funds “are safe.” NBC News reported that Zhao pleaded guilty to breaking U.S. anti-money laundering laws and later received a full pardon from President Donald Trump.

For now, Binance says its review is continuing and that it will release verified information through its official channels.