Binance battles to save its brand after record $6.3bn crypto hack

World’s largest crypto exchange faces fallout from angry customers, and Lula wins with WhatsApp

This week in tech, we’re discussing the fallout from the multibillion-dollar hack of Binance and the significance of Lula’s political mobilization on WhatsApp.

And if you’ll be at Web Summit in Lisbon next week, drop me a line! I’ll be there moderating panels on open-source AI and human agency in the age of AI agents.

The world’s largest cryptocurrency exchange endured the world’s largest online theft late last week. Binance was hit by a $6.3bn heist that, according to experts, was likely the work of North Korean hackers.

More than $2.5bn of the $6.3bn was taken in one transaction alone. A Binance engineer’s laptop was infiltrated, which in turn allowed the attackers to drain wallets. Binance later added that there were “additional points of breach” in its systems. The exchange said on X it would “cover all losses” and that “user funds are safe”. It also said it had frozen about half the funds targeted in the hack, stopping the thieves from making off with that tranche of cryptocurrency.

Most customers won’t have legal protections. Crypto users are not covered by formal deposit protections in countries such as the US, UK or Australia, meaning they won’t be reimbursed by their governments for their losses if an exchange is hacked or goes bankrupt. In Australia, you can claim a capital loss on your tax return if you can offer proof that a crypto asset was lost or stolen.

As Binance worked to contain the technical damage from the hack, it faced fallout from angry, scared users. The company announced Sunday afternoon that it had processed $4.6bn in withdrawals and $1bn in deposits, resulting in a net outflow of about $3.6bn – representing 2.1% of its $171bn in total assets under management.

Yesterday, former Binance CEO Changpeng Zhao warned that crypto scammers are now in “overdrive”, circulating screenshots of fake recompense schemes that promise $150 in free compensation for withdrawal suspensions. Binance has confirmed that it is false information and the screenshots are digitally altered. The hack has also spooked traditional financial markets, with investors also pulling out funds from Bitcoin exchange-traded funds in the US.

Yi He, co-founder of Binance and longtime partner of Zhao, has said that the company’s top priority was to “ensure the environment is secure, after which users can withdraw their funds and Binance can resume operations”. Alongside a proof of its reserves, the company tweeted: “Our commitment is unchanged: Binance will absorb the financial impact of the stolen funds, not our users.”

The name Binance was already associated with crime before the hack. Zhao pleaded guilty to violating US anti-money laundering laws in 2023 and stepped down as CEO. It’s no FTX, but the company faces an uphill battle to save its brand from $6.3bn worth of permanent damage.

Tell us: have you been affected by the Binance hack?

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Less than two weeks ago, Brazilian president Luiz Inácio Lula da Silva was accusing Meta of suppressing his posts on Instagram and Facebook and attempting to derail his campaign. Flávio Bolsonaro, his opponent and the son of the previous president, had all the momentum after the country’s first round of elections. Lula’s supporters felt like they would be crushed under the rightwing wave sweeping over Latin America. Meta denied bias but acknowledged technical failures in response to Lula’s accusations.

We will likely never know the full truth of what Meta did or did not do for Lula. Individual algorithmic moderation mistakes – usually a few egregious ones among millions of otherwise unobjectionable choices – seem like bias in times of heightened political tension. That’s what Meta says happened in Brazil. Raging against those errors makes for engaging posts, which outsizes the glitches’ significance. The history of accusations against Meta of political interference is arcane and complicated. The motives of everyone involved are suspect. Independent studies conducted after the 2020 US election showed that rightwing content traveled further on social media than leftwing posts do. That small data point indicates it may not have been the heavy thumb of Meta on the political scales in Brazil.

During the second-round runoff, Lula, 81, bought a smartphone for the first time and assembled WhatsApp groups of millions of supporters who mobilized in response to the threat of yet another Bolsonaro. (WhatsApp is owned by Meta.) At the helm of these channels was André Janones, the captain of “Lula’s army” and a federal deputy from the state of Minas Gerais. Janones issued daily social media challenges to the supporters he called his “soldiers”.

The successful campaigning via WhatsApp bears out a prediction that Meta CEO Mark Zuckerberg made in 2019: that the “digital living room” of private direct messaging and group chats would eclipse the “town square” style of public social media feeds. Lula’s supporters gathered in channels full of friendly faces to participate together in on-the-ground canvassing. Janones wasn’t posting to convert the general populace to his side. He was motivating the base with online communication to pursue IRL action. Members of Lula’s army were explicitly instructed supporters to neither share nor respond to posts from the opposition, displaying an understanding that any engagement boosts algorithmic reach in public social media.

Lula won the Brazilian election by 5 million votes, securing an unprecedented fourth term. After Janones’s innovative use of WhatsApp, Lula’s accusations seem like politicking borne of desperation. Lula also plays into longstanding conflicts between Brazil and tech giants like Meta. A decade ago, the country’s supreme court suspended WhatsApp, the very app Lula rode to victory, in a fight over end-to-end encryption. The court has also ordered investigations into Google and Telegram executives. In 2024, a supreme court justice banned Elon Musk’s X from the country after Musk refused to ban accounts threatening democracy and froze the financial accounts of his satellite internet company Starlink.

Having a common enemy helps to galvanize a base of supporters. In Lula’s case, the enemy was an easy target: a foreign tech company accused of interfering in Brazil’s democracy, as did Jair Bolsonaro, Lula’s longtime foe. According to my colleague Jonathan Watts, among the most popular chants of Lula supporters was “Hey Meta, vai tomar no cu!” (Hey Meta, go take it up the arse!).

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