A record-breaking hack at Binance, the world's largest cryptocurrency exchange, is a reminder of the risks investors take when trusting a company to hold their digital tokens.
Binance said Friday that the security breach affected about $6.3 billion in client assets, making it the largest crypto hack on record. Around $3 billion of the affected assets has been frozen on blockchain networks, and the exchange says it has begun recovering some of them.
Binance's initial investigation suggests hackers gained access to the firm's withdrawal systems and were able to make unauthorized transfers from the exchange's crypto wallets, according to the company. The company says it has found no evidence that the private keys controlling those wallets were leaked and is still investigating the full scope of the breach.
The company says it will cover customers' losses. Binance maintains a roughly $1 billion emergency fund known as SAFU, which was created to protect customers in the event of a security breach. The company initially said SAFU and company funds would cover the losses, and has since said it has set aside more than $6.3 billion of its own funds.
For crypto investors, the Binance breach highlights one of the risks of keeping assets on an exchange. While exchanges make it easier to buy, sell and store crypto, what happens after a hack can vary widely, including whether customers get their money back.