Binance hack nears FTX hole in size but not in panic, Dragonfly’s Qureshi says

The crypto market has weathered Binance’s $6.3 billion hack with less disruption than it experienced during the FTX collapse, according to Dragonfly managing partner Haseeb Qureshi.

Qureshi said in a Friday statement that crypto prices fell only a few percent after the incident, while investors continued buying the dip despite a global macroeconomic downturn. Outflows were also muted, and tokens directly affected by the hack largely maintained their value as the market expected Binance to cover the losses.

The contrast comes against the backdrop of FTX’s November 2022 collapse, which left customers facing an estimated $8 billion in losses and contributed to a series of bankruptcies across the crypto sector.

Although Binance’s losses were only around 25% smaller than FTX’s shortfall, Qureshi said confidence in Binance’s business and its financial capacity helped prevent a more severe market reaction. He also credited coordinated efforts across the industry to safeguard assets and facilitate recovery.

Binance said Friday it had committed more than $6.3 billion from its corporate funds to reimburse affected users and had started restoring their assets. The exchange already holds $5 billion in the token assets involved and is sourcing the remaining amount through market purchases and OTC transactions.

Bitcoin’s decline following the Binance incident was relatively limited compared to its reaction to FTX’s collapse.

The largest crypto asset fell approximately 5%, from above $80,800 to $76,500, versus a roughly 26% drop from $21,000 to $15,476 during the FTX crisis, onchain data shows.

However, Bitcoin was already in a deep bear market before FTX collapsed. The market had already been weighed down by macro tightening and earlier failures across the crypto industry.

Throughout 2022, aggressive Federal Reserve rate hikes reduced demand for risk assets. The downturn was further compounded by the Terra/UST collapse in May, the failures of crypto lenders Celsius and Voyager, and the bankruptcy of Three Arrows Capital.