Amid suspected Binance hack, Tether freezes $971M USDT as crypto market declines

BNB suffered the largest decline among major cryptocurrencies, indicating that investors are focusing on exchange-specific risk instead of a broad macroeconomic event. The losses were concentrated in long positions, suggesting the selloff was propelled by forced unwinding rather than new short bets, and this could be reversed if the panic subsides. Binance's lack of a response remains the crucial factor. If a security breach is confirmed, it would likely exacerbate selling pressure on BNB and erode trust in exchange custody. If Binance demonstrates that the funds remain under its control, the reason for the decline would disappear. Until either scenario is confirmed, expect reduced liquidity and price movements driven by news headlines.

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A freeze of $971 million in USDT by Tether has transformed an unclear $2.77 billion outflow from Binance into the market's primary concern, and the lack of comment from Binance is keeping the cryptocurrency market tense.

Key points:

• According to news reports, Tether has frozen $971 million worth of USDT in connection with a suspected hack at Binance.
• Blockchain data indicated that approximately $2.77 billion moved out of Binance wallets across five different blockchains late on 29 October. Binance has not issued a statement, and the breach has not been confirmed.
• Etherscan recorded two substantial transfers to a single newly created address. One transfer involved roughly 167,000 ETH and 1.6 billion USDT, while the other consisted of 780 million USDC.
• BNB dropped nearly 7% to around $700. Bitcoin edged down to approximately $78,900, and ether declined 4%.
• Liquidations amounted to roughly $620 million within a single hour, with about 97% being long positions.
• Allegations that the receiving address was financed via Tornado Cash have not been verified. No security firm has linked these transactions to theft.

Following blockchain data that revealed approximately $2.77 billion exiting Binance wallets across five networks late on Thursday, 29 October, Tether has frozen $971 million in USDT in connection with a suspected hack at Binance, according to newswire reports. Binance has not provided an update, and the breach remains unconfirmed.

Cryptocurrencies declined as the news emerged. Around 21:00 GMT, bitcoin traded near $78,900, down about 2.6% over the past 24 hours; ether dropped roughly 4% to approximately $2,257. According to Crypto News Flash, Binance's BNB token suffered the steepest decline among large-cap coins, falling almost 7% to around $700, with a 6% drop occurring in a single hour. XRP and Solana each lost over 5%.

Leveraged traders were caught off guard by the price movement. CoinGlass data, as cited by Crypto News Flash, indicated roughly $620 million in liquidations within one hour, nearly 97% of which were long positions, bringing the 24-hour total to approximately $951 million.

The outflow numbers were initially shared on X by the market news account Walter Bloomberg, which characterized the event as a suspected but unconfirmed hack. Coindoo, examining Etherscan, discovered two large Ethereum transfers to the same new address at approximately 20:24 and 20:41 GMT. The first originated from a wallet labeled Binance 14 and contained about 167,000 ETH and 1.6 billion USDT. The second involved 780 million USDC from a Binance hot wallet. Certain on-chain investigators have alleged that the receiving address was funded via Tornado Cash, a crypto mixing service that conceals the origin of funds. This claim has not been independently verified, and no blockchain security firm has publicly linked the transfers to theft.

The significance of the Tether freeze lies in its size, as it would be one of the largest actions by the stablecoin issuer, roughly three times the $344 million it froze alongside US authorities in April. Tether has the ability to blacklist addresses via a function embedded in the USDT smart contract, preventing the frozen tokens from being transferred. However, this only applies to USDT. Any ether, USDC, or other tokens in the transaction are beyond Tether's control, and a freeze does not automatically restore funds to their original owners.

A legitimate non-malicious explanation exists, which is why caution is justified. Large exchanges frequently move funds between hot and cold wallets. In February, Binance refuted viral reports of $10 billion to $17 billion in withdrawals, stating that third-party data had inaccuracies. However, a freeze of this magnitude by Tether is difficult to reconcile with a routine fund reallocation.

Traders will now await a statement from Binance regarding whether customer funds have been impacted and whether withdrawals are proceeding as usual. They will also seek clarification from security firms about who controls the receiving address. If a hack is confirmed, it would be among the biggest cryptocurrency thefts on record and could sustain pressure on BNB and the broader market. If Binance demonstrates that it still controls the funds, the market decline could reverse as rapidly as it occurred.