Binance Confirms $6.3 Billion Hack Losses Covered, New Reserve Disclosure Still Pending

According to Binance, it has successfully reimbursed all user funds that were impacted by the $6.3 billion (roughly Rs. 5,93,523 crore) hack that occurred in October and has also released a new Proof of Reserves snapshot. The exchange said in their statement of November 12 that clients would be capable of verifying that they had at least 1:1 backing once the proof process was complete. The statement didn't mention the expected time for the proof process or the purchases of individual assets.

SAFU, Futures Insurance and Corporate Reserves Supported the Asset Replacement Process

Thanking customers for their patience, the exchange wrote, “Binance has completed coverage of assets impacted in the security incident.” Binance revealed three financing streams in its recovery update on October 31, which included the Secure Asset Fund for Users (SAFU), Futures Insurance Funds, and the corporate cash reserve. Binance had kept over $6.3 billion (roughly Rs. 5,93,523 crore) in company funds, and the replacement fund accounted for 90 percent of it.

In addition, the trading exchange characterised its futures insurance reserves as belonging solely to the organisation rather than to clients. According to the reasoning, the transfer amount is derived from amounts above what the exchange's risk management system requires, with the rest meeting the criteria. For SAFU, Binance is set to replenish the emergency fund to around $1 billion (roughly Rs. 94,210 crore). The November 12 announcement did not give a conclusive breakdown of the final allocation between the three funding sources nor the completion of that particular replenishment pledge.

As of November 4, the replacement coverage had reached around 98 percent, according to Binance. The purchases were made through the market and over-the-counter (OTC) trades. The leftover tokens took time to be acquired due to lower liquidity. The company stated that its efforts included acquiring replacement assets from its reserves. Its latest announcement does not clarify whether all the cryptocurrencies stolen by the attackers have been recovered.

As per the reserves page of Binance, Merkle trees allow users to verify whether their balances are reflected in the total account balances mentioned in the reports. The zero-knowledge proof system verifies the balance calculations without disclosing users' balances. Customers have access to their record ID and Merkle leaf via the verification page of their accounts. Upon selecting a date for verification, customers see which assets are verified along with the account balances on that snapshot.