Binance Hack Hits Reserve Wallets and Puts ETH Backing Under Pressure
The attack mainly hit Binance’s ETH reserves; customer funds remain safe, according to the exchange. Tether, Circle, and Ripple have also already frozen parts of the haul.
Key Takeaways
- Binance says customer funds are safe after a hack drained reserve wallets that back customer balances.
- The ether backing was hit especially hard; coverage of the ETH reserves will temporarily fall to about 94% until Binance replaces the stolen coins.
- Stablecoin issuers have frozen large amounts, and Binance will take a new reserves snapshot on November 1.
Binance says customer funds are safe after a hack on Thursday drained reserve wallets that the crypto exchange itself lists as backing for customer balances. A review of the company’s own reserve data shows that the ether backing was hit especially hard, leaving that part of the reserves temporarily below 100% until Binance replaces the stolen coins. Earlier this year, a large outflow from Binance wallets already caused concern in the market after traders feared a hack and the price of Bitcoin and Ethereum dropped sharply.
Reserve Wallets Hit
Binance publishes every month which wallets it controls and how much crypto is in them, compared with customer balances on the platform. In the latest overview, from October 1, wallet “Binance 14” was also listed, the address that was at the center of the attack. That wallet held 1.26 billion USDT and 89,475 ETH at the time, spread across 37 assets.
According to the attack description, the attacker used an Ethereum feature, EIP-7702, which lets a wallet temporarily give control to software. After Binance 14’s key signed that permission, the wallet was turned into a sweeper that immediately routed incoming funds to the attacker’s address. Etherscan shows that 167,464 ETH flowed out of Binance 14, followed by 28,005.6 ETH from Binance 16. Shortly after that, 195,460 ETH, worth about $442 million (€397 million), was sent to a second address.
ETH Backing Under Pressure
The damage hits a relatively thin buffer. On October 1, Binance had exactly enough ETH to cover customer balances, a reserve ratio of 100%. The roughly 204,500 ETH that were taken now equal about 5.6% of Binance’s ETH reserves. That means ether backing drops to about 94% until the exchange tops up the supply. The smaller positions that were hit, including ENA, UNI, PEPE, and AAVE, account for between 7% and 15% of the reported holdings per token, according to Binance’s own figures.
Binance and co-founder Yi He say user funds are safe. In practice, that means customer balances will be honored even though the assets behind them were stolen. Founder Changpeng Zhao also said he expects users to be fully compensated. Binance also has a SAFU emergency fund with about $1 billion (€0.9 billion) in bitcoin that can be used to cover losses.
Why This Matters in Europe
For European crypto investors, this matters too because reserve proofs are becoming more important now that MiCA has been in force since July 1, 2026. Those rules require crypto service providers in the EU to have authorization and put extra pressure on transparency around custody and reserves. Binance is also dealing with a MiCA application in Greece that was expected to be rejected, which adds more pressure to the exchange’s European position.
Meanwhile, stablecoin issuers have already frozen a large part of the haul. Tether said more than 1.567 billion USDT has been frozen, while Zhao said Circle has frozen about $823 million (€739 million) in USDC. Ripple also froze about $200 million (€180 million) in assets, and World Liberty Financial froze $27 million (€24.3 million) in USD1. Binance will take a new reserves snapshot on November 1, which should show whether the stolen assets have been replaced by then.
