Coinbase says 99% of customer assets are in cold storage after Binance breach

Coinbase says it was not affected by the Binance breach

Coinbase, a U.S. crypto exchange — a platform for buying and selling digital assets — said it was not affected by Binance's $6.3 billion breach.

Binance was exploited on Oct. 29. The exchange said Tuesday that hackers used a fake job interview and an internal AI tool to help carry out the breach.

Coinbase shared its security details in a blog post published Wednesday.

Coinbase says customer assets are held 1:1 and kept mainly offline

Coinbase said it keeps more than 99% of customer assets in cold storage. Cold storage means keeping assets offline, away from the internet.

The company said customer assets are held 1:1. That means one customer asset is held for each asset owed to customers.

Coinbase also said the assets remain customer property. It said they are not lent or used without customer authorization.

To protect funds from unauthorized transfers, Coinbase said it uses distributed private keys, withdrawal limits, and anomaly detection. Anomaly detection means watching for activity that does not look normal.

Coinbase wrote: "Our responsibility is to keep improving safeguards and continuously monitor for threats so Coinbase can be the best place for customers to grow, use and move their money."

It also wrote: "The advancement of artificial intelligence capabilities is rapidly changing the security landscape, and, in response, Coinbase will continue to invest in best in class security innovation."

Binance says about 98% of affected assets have been replenished

Binance said Wednesday that it has replenished approximately 98% of the assets affected by its security breach.

The exchange said it is acquiring the remaining 2% through market and over-the-counter channels. It said purchases are taking longer because liquidity is lower.

Binance also said it expanded its Proof of Reserves coverage to 44 tokens, up from 10 previously. Proof of Reserves is a way for an exchange to show the assets it holds.

Key numbers shared by both exchanges

• Binance breach amount: $6.3 billion on Oct. 29
• Coinbase customer assets in cold storage: more than 99%
• Binance assets replenished: approximately 98%
• Binance Proof of Reserves tokens: 44, up from 10
• Binance remaining assets to acquire: 2%

Zhao says crypto companies need AI-based defences

Binance cofounder and former CEO Changpeng "CZ" Zhao said crypto companies need AI-based defenses. He also called for an industry alliance to share lessons and freeze stolen funds faster.

He said Tuesday: "The only way to fight a monster is to kind of become that monster."

The facts both companies have reported

Coinbase says it was not affected by the Binance breach. Coinbase says its customer assets are held 1:1 and remain customer property.

Binance says hackers used a fake job interview and an internal AI tool in the Oct. 29 breach. Binance says it has replenished approximately 98% of the affected assets.

What Binance says happens next

Binance said it is still acquiring the remaining 2% of affected assets. It said lower liquidity is making those purchases take longer.

The exchange also said a new zero-knowledge proof is expected to take 50 to 60 hours to generate. A zero-knowledge proof is a way to confirm information without showing all the underlying details.

Where this information comes from

• The Block