Binance’s $5.5B Drain Hits the Exit Lanes as $ETH Escapes the Freeze 🏃

Wallets linked to the Binance security incident drained at least $5.5 billion as the suspected attacker converted frozen-risk stablecoins into $ETH through decentralized finance venues, according to Etherscan records for 10 wallets, eight labeled as exploiters. Binance said it was investigating the incident but did not confirm that user funds were affected. The loss could stand as the largest hack in the crypto industry’s 18-year history.

Tether and Circle blacklisted addresses associated with the suspected attacker, preventing the tokens from moving, and more than $2 billion in their stablecoins has been frozen by different stablecoin providers. Because $ETH has no centralized issuer, funds converted before a freeze reached an address were outside the issuers’ reach. The swaps occurred through Uniswap, where trades settle automatically without a company operating in the middle.

One relay wallet received 20,940 ETH ($45.58 Million) from Uniswap’s UniswapX contract at 20:34 UTC, while another received 3,552 ETH (over $8 million) at 20:47. Two later wallets received about 18,085 ETH (around $41 million) from Uniswap contracts in batches of 7,444 ETH and 10,642 ETH, and about 16,498 ETH ($37.5 million) in batches of 6,946 ETH and 9,552 ETH.

Aave provided another route out. Between 20:57 and 21:01 UTC, one wallet deposited $10 million and then $50 million in USDT and borrowed 3,271 ETH ($7.43 million) and then 16,491 ETH ($37.47 million) against the deposits. Odysseas Lamtzidi, founder of Phylax Systems, warned of “contagion in full effect.” Aave subsequently froze its V3 markets on Ethereum mainnet, blocking new deposits and borrowing.

The decentralized finance market took further precautions as the $ETH accumulated. Kamino, a decentralized finance protocol built on the Solana blockchain, paused borrowing in its SOL/BTC Market and said it was monitoring the situation and communicating with various partners. A wallet labeled Exploiter 8 held 195,460 ETH ($444.2 million) at 22:03 UTC, and another 57,891.77 ETH ($131.6 million) reached a wallet labeled Exploiter 11, bringing the two holdings to about 253,000 ETH, or roughly $570 million.