Binance Hack May Be ‘Temporary Setback’ for Crypto, Grayscale Says

Binance’s $6.3 billion hack could temporarily hurt confidence in crypto markets but would ultimately lead to stronger security practices across exchanges, according to Grayscale.

“It also underscores the importance of institutional custody, such as offered by US-based crypto [exchange-traded products],” said Grayscale’s head of research, Zach Pandl, in a Tuesday report.

“These vehicles hold their assets at state-chartered banks and qualified custodians, typically offering offline storage, multi-signature wallets, SOC attestations and insurance policies,” he added.

Binance suffered a record $6.3 billion hack Thursday and pledged to cover all customer losses. The FBI attributed the attack to North Korea. Kim Yo Jong, sister of North Korean leader Kim Jong Un, dismissed the allegations as “absurd rhetoric.”

The hack was followed by a market sell-off, with Bitcoin falling below $77,000 and BNB losing more than 8% over 24 hours by early Friday.

By Wednesday, total crypto market capitalization had rebounded 2% over the past 24 hours to about $2.63 trillion, after touching a weekly low of about $2.55 trillion earlier in the day. The recovery left the market about $100 billion below its Oct. 28 level.

Bitwise’s head of research, André Dragosch, told Cointelegraph that recent outflows from US spot Bitcoin exchange-traded funds were “related to a short-term risk-off environment rather than a structural change in institutional sentiment.”