In the aftermath of the late October cyberattack, Binance has tapped into its Secure Asset Fund for Users (SAFU), deploying approximately 7,500 Bitcoin to mitigate user losses. This deduction has brought the balance of the emergency fund’s Bitcoin wallet down to about 7,500 BTC following four transactions.
Commitment to Replenish the Emergency Reserve
Initially, in February, Binance had augmented its SAFU fund to nearly $1 billion by converting stablecoins to Bitcoin, thereby accumulating a total of 15,000 BTC. On evaluating the current Bitcoin price at $77,000, the remaining portion of the fund is presently valued at approximately $580 million. The recently utilized 7,500 BTC covers roughly 9% of the attack damage.
Binance revealed on October 31 that it would harness not only SAFU but also corporate assets and a futures insurance fund to address an attack-related loss of about $6.3 billion. Furthermore, the exchange has vowed to restore SAFU to around $1 billion, although details on the amendment timeline and the precise utilization of the futures insurance fund remain undisclosed.
Asset Decline and Financial Strain
SAFU serves as an allocated reserve to reimburse users for unexpected asset losses resulting from cyberattacks. In adherence to Binance’s prevailing policy, should Bitcoin price drops lead to the fund’s valuation plunging below $800 million, efforts will be enacted to re-elevate it to approximately $1 billion. Nevertheless, Binance has yet to disclose protocols for reconstitution when the fund is utilized for compensation payouts.
Vetle Lunde, Head of Research at K33 Research, estimates Binance’s pre-tax profit for the 2021–2025 period to be around $19.2 billion. According to Lunde, known penalties and attack damages for Binance accumulate to approximately $10.7 billion, accounting for 56% of the projected five-year profit. These figures are based on estimations due to Binance’s non-disclosure of consolidated group financial statements.
Penalties cumulatively tally to about $4.34 billion, with $4.32 billion from a 2023 settlement of a U.S. criminal probe and around $20 million from regulatory fines in other countries. During an attack in 2019, Binance lost 7,000 BTC, valued at approximately $41 million at the time. Incorporating the latest attack loss of $6.34 billion, total attack damages now amount to about $6.38 billion. Nearly $3 billion connected to the latest hack is frozen on-chain, and Binance is anticipated to recover some of these assets.
According to K33 Research, Binance’s tracked total assets have tumbled by over 11% since the October 29 attack, declining to about $128.3 billion. Shortly, Binance reported that deposit volumes now exceed withdrawals on an hourly basis. The company views this shift as an indication of user activity recovery and stabilization of fund flows.
The positive hourly net inflow signals a resurgence in Binance’s financial flow. Yet, the timeline to replenish SAFU and the recovery potential of frozen assets will directly influence the pressure on Binance’s investment and expansion agendas. As Coinbase, Kraken, and OKX persist in growing, these factors may critically impact the resources available for Binance’s future investments.
