Binance Hack: Hacker's Rushed Liquidation Costs Over $100M, Arbitrageurs Cash In
nashnova research
Binance suffered an estimated $6.4 billion hack — the largest single crypto theft on record — but the attackers' panicked liquidation cost them roughly $119 million in execution losses, with nearly half captured by arbitrage traders and bots.
How did $6.4 billion get stolen?
Binance detected a security breach on October 29 and froze all withdrawals immediately.
This means → cross-platform price gaps that normally close in seconds were forced open for minutes or even hours, creating a rare structural market dislocation.
Binance says it has since frozen about $3 billion in related assets with industry partners and used its own funds to cover losses. Over $3 billion remains in the hands of hackers linked to North Korea.
Why did the hackers dump at any price?
The stolen funds included large amounts of USDT and other stablecoins — tokens pegged 1:1 to the U.S. dollar — whose issuers, Tether and Circle, can freeze assets directly on-chain.
In plain terms = stolen stablecoins are like a cashier's check the bank can void at any moment. The hackers had to convert them into un-freezable assets like Ether before the kill switch was flipped.
Within roughly 30 minutes the attackers began aggressively swapping through decentralized exchanges (trading platforms that match orders on-chain without an intermediary) such as Uniswap. About 40 minutes later, Tether and Circle froze approximately $1.8 billion in stablecoins — but the bulk of the swaps were already done.
Where did the $119 million in losses come from?
The hackers' average cost to buy Ether on decentralized exchanges was roughly $2,657, while Hyperliquid — a crypto derivatives platform — quoted about $2,300 at the same time, a premium exceeding 15%.
This means → in a thinly liquid on-chain market, each large buy pushes the price higher, forcing the next order to fill at an even worse level — a textbook case of market impact running away from the trader.
Bitquery estimates that of the roughly $119 million in execution losses, about half was captured by arbitrage traders and bots. Another $29.5 million went to Ethereum block builders (the nodes that sequence and bundle transactions into blocks) as gas fees.
How exactly did the arbitrageurs profit?
Former quant trader Annanay Kapila spotted Ether prices spiking above $3,000 on some decentralized exchanges. He borrowed Ether on lending platform Aave, sold it at the inflated price, and closed the trade in five minutes for a 25% profit.
D2 Finance founder Luca Parlamento said his team spent the night operating on "the other side of the hacker's trades." In plain terms = the hackers were buying at any price, and the arb desks were selling to them.
Not everyone jumped in. Rajiv Sawhney of Waves Digital Assets said his team monitored the dislocations but stayed on the sidelines — the biggest opportunities belonged to firms already positioned in the right venues, and the window was short while trading costs spiked.
What chain reactions hit other networks?
On the Tron network, the hackers used SunSwap to buy roughly 638 million TRX in 16 separate trades at an average price of about 36.7 cents — roughly 11% above the market price — briefly pushing the pool's price to more than 118% of the broader market. The gap took about 10 hours to close.
Ripple's dollar stablecoin RLUSD saw an even more extreme distortion: $48 million was dumped into a very shallow liquidity pool, crashing the price to 81 cents before it recovered to $1 parity within minutes.
This reflects a structural reality of decentralized exchanges: liquidity is scattered across hundreds of independent pools, and a single large trade can punch through the price floor instantly.
What deeper problem does this expose?
Tim Way, Fireblocks' global head of banking, noted that unauthorized signing is the critical failure point in attacks like this — "once it's on the blockchain, it's very hard to unwind."
This means → the vulnerability is not on-chain but off-chain: the exchange's internal key management and signature-authorization processes are the real battleground.
Over $3 billion in stolen assets remains with the hackers. Whether it can be intercepted before being further dispersed is the key test in the next phase.
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