Grayscale Says Binance Hack Could Lead to Stronger Crypto Security

Highlights:

• Grayscale says the $6.3 billion Binance hack could lead to stronger security across cryptocurrency exchanges.
• Grayscale highlights institutional crypto custody as OKX CEO Star Xu questions Binance’s security measures.
• Binance says it has restored most affected assets and strengthened security following the October 29 hack.

Grayscale believes the $6.3 billion Binance hack could push cryptocurrency exchanges to improve security and encourage more US investors to use institutional custody services. The firm said the attack may weaken market confidence in the short term, but exchanges could introduce stronger protections following the breach.

In a November 3 report, Grayscale Head of Research Zach Pandl said the October 29 attack pushed crypto security losses above $8 billion in 2026. However, he noted that security losses have generally declined relative to the total cryptocurrency market value over time.

~$6B stolen from Binance. 95% already covered by the exchange. Zero user losses.

Binance absorbed the largest hack in crypto history on its own balance sheet. The incident is drawing attention to security and custody standards, including institutional arrangements behind crypto… pic.twitter.com/rqxtdqXkDM

— Grayscale (@Grayscale) November 3, 2026

Grayscale Says Institutional Custody Can Improve Investor Protection

Pandl said that without the Binance theft, industry losses this year would be similar to those recorded last year. He also pointed to Binance’s efforts to restore affected customer balances. Grayscale cited 95% coverage of the affected assets and said stablecoin issuers, including Tether and Circle, had frozen approximately $2.9 billion, or 45%, of the stolen funds. Pandl expects those frozen assets to return to Binance, although their recovery is not yet complete.

However, Binance shared updated figures in its November 3 report. The exchange said it had restored 98% of the affected tokens by October 31. It also reported that authorities and partners had frozen or stopped around $2.85 billion in stolen funds. Binance promised to cover all customer losses using its own funds.

Meanwhile, Pandl said US investors could use crypto exchange-traded products (ETPs) to gain exposure to cryptocurrencies without holding them directly. These products rely on professional custodians to keep investors’ assets safe.

According to Pandl, US crypto ETPs use offline storage, separate customer accounts, and multiple security checks before approving transactions. They also follow strict security procedures and may carry insurance. Some products allow investors to transfer eligible cryptocurrencies directly without changing their original cost basis.

OKX CEO Star Xu Questions Binance’s Security Response

In a November 4 post on X, OKX CEO Star Xu criticized Changpeng Zhao’s public comments following the hack. He argued that comparing crypto exchange security with traditional banks overlooked the different risks both businesses face.

I genuinely don’t want to criticize a competitor during their crisis. What I really want is for us to work together with them to raise security standards and better protect the entire crypto industry.

But I have to say, the interview with the “richest man in crypto,” who claims… https://t.co/9itm5akdG7 pic.twitter.com/gQvElT5Fwn

— Star_OKX (@star_okx) November 4, 2026

Xu also questioned how hackers managed to access Binance’s systems despite its multiple layers of security. He criticized Binance for focusing on the small percentage of funds stolen and continuing its marketing campaigns after the attack. However, Xu called on crypto exchanges to work together to improve security. He also warned that the hack could hurt trust among institutional investors and regulators.

Binance Explains How Hackers Entered Its Systems

In its November 3 report, Binance said hackers tricked an employee with a fake job interview and installed malicious software on their device. They then gained access to Binance’s internal wallet system and moved funds without following the normal withdrawal process. Binance also found that hackers had tampered with a software installation tool. The attackers spent several months gaining access to systems used to manage crypto transactions.

Binance said it has rebuilt affected systems, tightened device controls, and expanded suspicious-activity monitoring. It is also seeking an independent security review. The FBI blamed North Korean-linked hackers for the attack, but North Korea denied the allegations.