The virtual asset market is on edge following remarks suggesting that a hack occurred at Binance, the world's largest cryptocurrency exchange. The first to raise the possibility of a hack was Binance founder Changpeng Zhao. However, the scale of the damage and the attack vector have not been disclosed, and the only figures the market can confirm are the funds frozen by stablecoin issuers. As of the morning of the 30th, when news of the apparent hack emerged, Bitcoin was trading at $76,552 and XRP at $1.20.

Security incidents at major exchanges typically lead to increased fund outflows from the exchange and a contraction in short-term investor sentiment. In particular, as Binance accounts for a substantial share of global spot and futures trading volume, restrictions on deposits and withdrawals could result in price discrepancies with other exchanges or changes in liquidity. The price movement of BNB, which is directly tied to the Binance ecosystem, is also worth watching.

■ Tether and Circle Freeze $1.794 Billion... Circle's 'Unusual' Swift Response

The combined funds mentioned as frozen by the two issuers total $1.794 billion. In terms of proportion, Tether accounts for about 54.1% and Circle about 45.9%. Considering that Tether overwhelmingly dominates in issuance scale, it is notable that Circle's frozen amount is nearly on par with Tether's. Circle has been known to maintain a conservative approach to freezing funds, primarily through legal procedures such as court orders or requests from investigative authorities, making its swift freezing of large-scale funds this time an unusual case.

■ Cause, Scale, and Method of Attack Still Unknown

However, Zhao did not explain the specific circumstances of the hack, the scale of the damage, or the method of attack. It is currently unknown whether Binance's own exchange wallets were breached, or whether user accounts or affiliated services were attacked. It has also not been confirmed whether the entire $1.794 billion frozen corresponds to actual losses. The frozen amount could be only part of the damages, or it could include funds unrelated to the hack.

■ 45 Times the 2019 Losses and 3.1 Times the 2022 Bridge Incident

In terms of scale alone, this incident is on a different level from past Binance-related incidents. In 2019, Binance had approximately 7,000 Bitcoin (about $40 million at the time) stolen from its hot wallets and suspended withdrawals for about a week. In 2022, the BNB Chain cross-chain bridge was attacked, resulting in the leakage of about $570 million worth of assets. The frozen amount alone reaches approximately 45 times the 2019 losses and about 3.1 times the 2022 bridge incident. While the premise that the frozen amount equals the actual losses does not hold, it is a sufficient indicator for gauging the scale of the shock felt by the market.

■ Stablecoins' Dual Nature in the Spotlight Again

Meanwhile, this incident has once again highlighted the dual nature of stablecoins. The fact that issuers can immediately freeze funds at specific addresses served as a safety mechanism preventing the spread of hacking damage. Conversely, the fact that centralized issuers can freeze funds at any time has been a persistent point of contention in the virtual asset market, which champions decentralization. As countries push to institutionalize stablecoins, this large-scale freezing case could also influence discussions surrounding issuers' freezing authority and scope of responsibility.

[This article is not intended as investment advice. Virtual assets are high-risk assets with extreme price volatility. Investment decisions and the resulting responsibility rest solely with the investor. AI was partially used in producing this article.]