Binance Resumes Withdrawals Amidst Zero-Knowledge Proof Delays
Binance processes billions in outflows while preparing cryptographic verification for user balances.
1Phased Withdrawal Resumption
Binance initiated a phased reopening of withdrawals on Sunday, starting with Bitcoin between 06:00 and 09:00 UTC. This process expanded to include 14 other networks, such as Ethereum and Solana. By Sunday afternoon, the exchange successfully processed $4.6 billion in withdrawals against $1 billion in deposits, demonstrating operational continuity despite recent security challenges.
2Quantifying the Net Outflow
The exchange experienced a net outflow of approximately $3.6 billion, representing 2.1% of its total $171 billion in assets. While significant, this movement is characterized as a minor jog rather than a full-scale bank run. Binance officials maintain that these capital flows are currently stabilizing as customer activity returns to more predictable patterns.
3Recovery of Stolen Assets
Binance has successfully covered 95% of the funds lost during the recent $6.3 billion hack, an increase from 80% reported last Friday. The remaining 5% consists of less-liquid tokens currently being acquired. Capital for this recovery was sourced from the SAFU fund, futures insurance, and the corporate treasury to ensure full user protection.
4Zero-Knowledge Proof Timeline
The full proof of reserves, promised by co-CEO Richard Teng, is now scheduled for release on Tuesday, November 3, 2026. Generating this cryptographic proof requires 40 to 50 hours of continuous computation. This mechanism aims to allow individual customers to verify their specific balance inclusion without exposing private data or other users' sensitive account information.
5Identity and Security Infrastructure
Technical analysis suggests that the breach involved Binance's own signing infrastructure rather than forged signatures. The system authorized transactions it should have rejected, highlighting a critical flaw where approval mechanisms shared the same host as request paths. Experts argue this indicates a lack of true control, functioning more as a convention than a security barrier.
6FBI Attribution and Investigation
The FBI has officially attributed the massive security breach to North Korean actors. Binance has committed to publishing a comprehensive post-incident report once the ongoing investigation concludes. Furthermore, the exchange identified additional points of breach within its architecture, raising questions about the internal security protocols and the potential for future system hardening measures.
7Centralization vs Decentralization Debate
Industry observers highlight that Binance operates as a centralized trading system, which facilitated the failure. Critics argue that the reliance on stablecoins, which are blockchain-based dollars, underscores the lack of true decentralization in the ecosystem. This event has reignited discussions regarding the adult supervision problem and the inherent risks of trusting exchanges with private keys.
8Future Implications for Exchanges
The reliance on cryptographic proofs represents a shift toward greater transparency in centralized finance. As Binance works to restore its SAFU fund to $1 billion, the industry watches to see if these technical safeguards can effectively mitigate the risks of identity-based attacks. Future stability depends on reconciling centralized operational control with robust, verifiable security architectures.
Original article: Feld Thoughts — Binance Resumes Withdrawals Amidst Zero-Knowledge Proof Delays