(Bloomberg) -- For most crypto investors, the theft of $6.3 billion from Binance was a reminder of the risks that still surround digital assets. For a small group of fast-moving trading firms and skilled investors, it was a chance to make a quick buck.
As apparent North Korean hackers rushed to convert funds stolen from the world’s biggest crypto exchange, they accepted punishing prices. That handed well-prepared traders a fleeting but lucrative opportunity. Bitquery, a blockchain data firm, estimates the attackers lost about $119 million through poor execution in their haste.
“The hack created sharp price volatility and a single, large, price-insensitive seller moving through thin liquidity,” said James Aitchison, chief investment officer at Caerus Global Management. That aggressive, one-way torrent distorted crypto prices across disparate venues and blockchains, he said, adding: “We traded the event and found several attractive dislocations.”
After gaining control of Binance funds on Oct. 29, the attackers focused on getting rid of the stablecoin portion of the haul, knowing issuers would soon begin freezing those stolen tokens. Within roughly half an hour, they began aggressively swapping stablecoins such as USDT into other cryptocurrencies like Ether, which can’t be frozen, buying the tokens wherever they could and jacking up the price.
Tether and Circle froze roughly $1.8 billion worth of their stablecoins about 40 minutes after the main Ethereum leg of the hack began, according to blockchain intelligence firm TRM Labs.