Andreas Severin, CSO at Virtune, says the roughly $6.3 billion Binance hack shows exchanges are the industry's weak point, and that no MiCA-regulated exchange has been hacked. The market has weathered the shock far better than feared.
Binance, the world's largest crypto exchange, was hit in late October by what the company itself calls one of the largest financial thefts in history, as attackers drained roughly $6.2 billion from the platform. The FBI has confirmed North Korea, through the hacking group TraderTraitor, was behind it. Virtune is a Swedish issuer of exchange-traded products (ETPs) for cryptocurrency. Kaupr spoke to Andreas Severin, CSO at Virtune, about how he assesses the incident.
Severin says it isn't the blockchain or the cryptocurrencies themselves that were hacked, but a centralized exchange – the same pattern as last year's Bybit hack. He notes that the FBI has confirmed the same group, TraderTraitor, was behind both attacks. Around half of the $6.2 billion was stablecoins, and these were immediately frozen by issuers Tether and Circle, denying the hackers access. The rest was bitcoin, ether, solana and XRP.
"If we look at the whole crypto ecosystem, it's once again the exchanges that have proven to be a weak point here," Severin says. He believes the incident confirms the need for stricter regulation of crypto services generally, and of crypto exchanges specifically.
Severin highlights that Binance reacted quickly and openly: the exchange immediately pledged to cover the loss, and has reported how. By the time of the interview, Binance had covered up to 90 percent of the lost bitcoin and ether, mainly from its own balance sheet – the fund the company originally set aside covered only up to $1 billion. Withdrawals had also reopened by then, and Binance has pledged to fully compensate every affected user.
Severin notes that Binance has been profitable for a long time, and that a less transparent handling of the incident would likely have triggered a far sharper market reaction.
Severin points out that no exchange regulated under MiCA – the EU's framework for crypto services – has been hacked. Binance itself was denied a MiCA license last year, after regulators cited weaknesses in the company's security routines. Severin says that doesn't mean the hack could necessarily have been avoided with a license, but that the connection "is not a coincidence."
"MiCA is now, for the first time, fully implemented in almost all EU member states, and alongside regulating stablecoin issuance, a large part of the framework is devoted to crypto exchanges. That will play an even more important role going forward, because of this incident with Binance specifically," Severin says.
Severin argues that investors who gain crypto exposure through regulated products such as ETPs in Europe or ETFs in the US are better shielded, because the underlying assets are held with a regulated custodian. Virtune uses Coinbase and BitGo, both of which hold MiCA licenses, and keeps the assets in cold storage, meaning offline.
He expects the hack to drive increased flows into regulated investment vehicles, as the industry has also seen after previous incidents. At the same time, Severin stresses that regulated products aren't shielded from the price moves that follow such incidents in the wider market either.
The crypto market was down roughly 3.6–3.7 percent overall at the time of the interview, according to Severin, far less than the scale of the hack might suggest. He points to several factors coinciding in the same period, including reports from Anthropic and Amazon and options and futures expiries.
Severin believes the reaction would have been far sharper ten to eleven months ago, when the market was still in a downturn, and reads the relatively calm reaction now as a sign of strength. He still expects volatility ahead, but believes the underlying drivers behind bitcoin and tokenization remain intact.
Watch the full interview below.
Sources: Virtune, via Kaupr TV
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