Coinbase says customers unaffected by $6.34B Binance hack

Coinbase has said Binance’s $6.34 billion hot-wallet hack has had no impact on its systems or customer funds, with more than 99% of customer assets reportedly held in cold storage.

Summary

• Coinbase said its systems and customer funds were unaffected by the Binance hot-wallet incident.
• More than 99% of customer assets are in cold storage, according to TechFlow’s report.
• The exchange says customer assets remain fully backed and cannot be used without permission.
• South Korean authorities have asked local exchanges to strengthen cold storage and withdrawal controls.

According to TechFlow’s Nov. 4 account of a Coinbase blog statement, the U.S. exchange keeps more than 99% of customer assets in cold wallets and adjusts its hot-wallet balances to meet deposit and withdrawal needs.

The statement described safeguards including distributed signing keys, withdrawal limits, unusual-activity detection, and controls that can stop transaction signing.

Coinbase’s reassurance follows the Oct. 29 theft from Binance, where attackers accessed an internal wallet-signing service and moved assets outside the exchange’s normal withdrawal process.

Coinbase describes how it holds customer assets

In its published custody explanation, Coinbase says customers retain ownership of digital assets held through its exchange. Internal records track account activity, while the company holds customer assets at a 1:1 ratio.

The exchange says it does not lend or otherwise use those assets unless customers specifically instruct it to do so.

Its storage arrangements combine offline facilities with secure multiparty computation, or MPC, which distributes cryptographic signing material among separate participants.

According to the company, individual participants hold only their own shares, and transactions can be signed without assembling the complete key in one place. Each participant checks transactions against applicable policies.

The explanation applies to hosted Coinbase.com accounts. Users of its self-custody wallet hold responsibility for their own private keys.

On its separate security page, Coinbase lists account protections including two-factor authentication with security-key support and withdrawals requiring multiple approvals through Coinbase Vault.

U.S. crypto holdings have different insurance protections

Coinbase’s insurance overview says its crime insurance protects a portion of digital assets across its storage systems against theft, including cybersecurity breaches.

Coverage does not extend to losses caused by someone gaining access to a personal account through stolen or compromised credentials. The company says losses from a covered security event could exceed the amount recovered from insurers.

For U.S. customers, cryptocurrency holdings do not receive Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protection.

Dollar balances have separate arrangements. Coinbase says it can hold customer dollars in custodial accounts at financial institutions, short-term U.S. Treasuries or dollar-denominated money market funds, subject to applicable rules.

Where dollars are held as cash at eligible banks or credit unions, pass-through deposit insurance may be available if the institution fails. Coverage depends on the relevant conditions, records and regulatory determinations, with a current limit of $250,000 per depositor.

Binance says attackers bypassed normal withdrawals

In its Nov. 3 incident findings, Binance put the affected assets at approximately $6.34 billion and said around $2.85 billion had been frozen or intercepted, subject to reconciliation and market prices.

The exchange described a campaign involving fake recruitment interviews, compromised developer software and an internal AI tool before attackers reached wallet-signing operations.

Binance said malicious Ethereum authorizations allowed further transfers independently of its normal withdrawal infrastructure. Suspending withdrawals and shutting down hot-wallet services did not automatically cancel permissions already established on-chain.

The company said it rebuilt affected wallet systems, replaced devices, disabled compromised credentials, and strengthened monitoring.

As crypto.news previously reported, Binance completed reserve verification for ten cryptocurrencies on Nov. 2 using an Oct. 31 snapshot. The covered assets included Bitcoin, Ether, USDT, BNB, SOL, USDC, XRP, USD1, RLUSD and ZEC.

South Korea asks exchanges to strengthen wallet controls

South Korea’s Financial Services Commission has asked domestic exchanges to strengthen cold-wallet safeguards and financial reserves following the Binance incident.

The regulator’s review covered withdrawal approvals, administrator privileges, internal access and transaction monitoring. Existing rules require providers to keep at least 80% of customer crypto assets in cold storage.

Financial Supervisory Service figures submitted to lawmaker Min Byeong-deok showed Upbit held 99.17% in cold storage at September’s end, followed by Bithumb at 94.76% and Coinone at 85%.

Authorities requested continuous deposit and withdrawal monitoring, additional incident-response personnel, and procedures for sharing information about abnormal access attempts.