Bitcoin slides after crypto's nightmare scenario: a historic $6.3 billion heist
By Joseph Adinolfi and Barbara KollmeyerBitcoin was off by 4% in recent tradeBitcoin and related stocks tumbled Friday after a record hack of the cryptocurrency platform Binance.Prices of cryptocurrencies bitcoin and Ethereum were tumbling on Friday after offshore crypto exchange Binance said hackers had stolen $6.3 billion in what is being described as the largest crypto hack on record.Bitcoin (BTCUSD) was off by 4.3% at $77,318 a coin in recent trading, while Ethereum (ETHUSD) was down 1.2% $2,231, according to FactSet data.By working with industry partners, the exchange managed to freeze about $3 billion in stolen assets, and the company has already started the recovery process, a Binance representative told MarketWatch. Binance has promised to cover all customer losses, and vowed to restart withdrawals within two days after freezing them as a security precaution.An initial investigation found that the breach involved a compromised laptop belonging to an engineer, although additional points of failure were uncovered later. The company didn't elaborate on what those might be; however, it did say that none of its private keys had leaked, which would have been a potentially more serious problem."We are still on track toward the expected timeline to resume the withdrawal service in 45 hours. Deposits remain unaffected," Binance said on an X post on Friday.Cybersecurity research firms TRM Labs blamed the theft on TraderTraitor, North Korea's elite hacking unit, "based on robust on and off-chain intelligence.""The FBI named the same group as responsible for the $1.5 billion Bybit hack in February 2025. Several features of this attack match earlier North Korea-linked heists, including the Bybit hack and the KelpDAO hack in April 2026: small Tornado Cash withdrawals funding an operator wallet, staging that began well before the theft, and signatures obtained in advance then executed in one burst," TRM said.Tornado Cash, which was developed on the Ethereum chain, allows a user to deposit different cryptocurrencies into a shared pool. The user gets a transaction key that can be used to withdraw the crypto into a different wallet.Sean Farrell, head of digital asset strategy at Fundstrat, said blockchain data showed around $6.3 billion was drained from Binance wallets across eight chains on Thursday, with $6.1 billion of taken in the first 55 minutes. The hack is now the biggest on record, he said."The most important takeaway for markets is that this does not currently appear to create meaningful solvency risk for Binance. Assuming frozen stablecoins are ultimately returned, the hole is [approximately] $3.3 billion," Farrell told clients in a note."The real systemic concern would be a shortfall in customer assets that forces Binance to liquidate reserves, accelerates withdrawals, causes counterparties to pull credit, and creates a reflexive deleveraging cycle across crypto. I do not think that is the setup we are dealing with, but the key tell will be how quickly withdrawals resume and whether outflows stay orderly," he said.The onus is now on exchanges to prove customers funds are secure. "Until there is greater clarity around how this compromise occurred, I think it is reasonable for users with funds on Binance to reassess how much capital they need to keep on the venue vs. what can be held elsewhere," he said.The Binance hack wasn't the only notable incident in cryptoland: Polymarket paused trading after some users said that their accounts had been drained by hackers. Polymarket has a data partnership with Dow Jones, the publisher of MarketWatch.Big-tech stocks also were being pummeled as investors increasingly worry about when the voracious artificial spending spree might pay off. Shares of Alphabet (GOOG), Meta (META), Oracle (ORCL) and several other "hyperscalers" negative for the year, according to FactSet.The news of the Binance hack was just the latest setback for the crypto market, which was struggling in October after a late-summer rally brought the bitcoin price back above $70,000 for the first time in a few months. A number of factors had been weighing on sentiment in the market, including expectations for more Federal Reserve interest-rate hikes."Bitcoin is back below $77,000, Binance is dealing with a reported $6.3 billion security incident, and the Fed has made it pretty clear that higher interest rates could stick around longer than markets hoped," wrote Ryan Kirkley, co-founder and CEO at Global Settlement Network in commentary shared with MarketWatch. "Add another reported Polymarket breach and the US midterms just days away, and crypto has plenty to digest."Across related stocks, Strategy (MSTR), Circle Internet Group (CRCL) and Coinbase (COIN) all fell over 4%, while shares of Robinhood (HOOD) slid over 5%.Brian Armstrong, co-founder and CEO of Coinbase (COIN), said on X that the exchange was blocking compromised wallets and urged the industry to work together over the hack. "Crypto has been through many tough times, and has always come out stronger on the other side. This won't be any different."-Joseph Adinolfi -Barbara KollmeyerThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.