Binance's $6.3 billion hack caused less disruption than FTX, Dragonfly's Qureshi says
In brief
- Dragonfly's Haseeb Qureshi said markets took Binance's $6.3 billion hack better than FTX's collapse.
- Binance said it committed more than $6.3 billion in corporate funds to reimburse affected users.
- Bitcoin fell about 5% after the hack, versus roughly 26% during the FTX crisis.
- FTX collapsed in 2022, when Bitcoin was already in a deep bear market.
Why the calmer reaction?
In his statement, Qureshi said crypto prices fell only a few percent after the incident, and investors kept buying the dip despite a global macroeconomic downturn. Outflows were muted, according to Crypto Briefing. Tokens directly affected by the hack largely held their value because the market expected Binance to cover the losses.
That's the heart of his argument.
Crypto Briefing put Binance's losses at only around 25% smaller than FTX's shortfall. Qureshi said confidence in Binance's business and financial capacity kept the market reaction from getting worse, and he credited coordinated efforts across the industry to safeguard assets and help recovery.
How Binance says it's paying users back
Binance said Friday it had committed more than $6.3 billion from its corporate funds to reimburse affected users and had started restoring their assets. The exchange already held $5 billion in the token assets involved (per its statement, as reported by Crypto Briefing) and was sourcing the rest through market purchases and OTC transactions.
The FTX comparison comes with a caveat
Bitcoin fell about 5% after the Binance incident, from above $80,800 to $76,500, according to Crypto Briefing's on-chain data. During the FTX crisis it dropped roughly 26%, from $21,000 to $15,476.
Those two numbers don't come from the same kind of market, though. Bitcoin was already in a deep bear market before FTX collapsed in November 2022. That collapse left customers facing an estimated $8 billion in losses (Crypto Briefing's estimate) and contributed to a series of bankruptcies across the crypto sector.
Aggressive Federal Reserve rate hikes had cut demand for risk assets throughout 2022. The Terra/UST collapse in May made it worse, and so did the failures of crypto lenders Celsius and Voyager and the bankruptcy of Three Arrows Capital. FTX didn't fall into a healthy market. It fell into one that had already been hit several times that year.
Frequently asked questions
How is Binance reimbursing users affected by the hack?
Binance said Friday it had committed more than $6.3 billion from its corporate funds to reimburse affected users and had started restoring their assets. It already held $5 billion in the token assets involved and was sourcing the rest through market purchases and OTC transactions.
Why did the market react less to the Binance hack than to FTX, according to Qureshi?
Dragonfly's Haseeb Qureshi said industry cooperation and confidence in Binance's business and financial capacity helped limit the fallout. Crypto Briefing reported that outflows were muted and that affected tokens largely held their value because the market expected Binance to cover the losses.
How did Bitcoin's drop after the Binance hack compare with the FTX crisis?
According to Crypto Briefing's on-chain data, Bitcoin fell about 5%, from above $80,800 to $76,500, after the Binance incident. During the FTX crisis it fell roughly 26%, from $21,000 to $15,476, though Bitcoin was already in a deep bear market before FTX collapsed.
