Binance begins replacing assets after $6.3 billion hack

Binance has begun replacing crypto assets affected by the hack with company funds. The exchange has allocated more than $6.34 billion to cover confirmed losses, including about $5 billion in the specific cryptocurrencies involved.

Binance is buying the remaining tokens through regular market trades and over-the-counter transactions. Users are expected to receive the same cryptocurrencies that were affected, rather than an equivalent value in Bitcoin, Ethereum or cash.

The purchases may take time because some of the tokens have limited trading activity. Large orders and delays in settling OTC transactions could further slow the process.

The exchange is working with law enforcement agencies, crypto projects, blockchain investigators and other industry participants to trace and recover the stolen funds. About $3 billion in assets has been frozen, according to Binance. That amount is separate from the funds allocated to replace user assets and remains under review.

Binance plans to use its own funds to cover confirmed losses. It also plans to verify that user assets remain fully backed through its Proof of Reserves system.

Some customers may sell or withdraw their replacement assets, convert them into stablecoins or traditional currency, or transfer them to personal wallets. Others may move their funds to decentralized exchanges, which allow users to trade from personal wallets without placing their assets in the custody of a centralized exchange.

Decentralized exchanges carry separate risks, including smart-contract vulnerabilities, hacks and limited liquidity. Binance could complete the reimbursements while still losing customers because of concerns about future security incidents.