The staggering digital hack at Binance, where criminals made off with $6.3 billion in digital coins in a breach that the company revealed on Thursday, is a reminder that putting money into cryptocurrency still involves a fair bit of risk.
Binance has said it will reimburse customers who have experienced losses. It has no real choice but to make people whole, lest its customers’ confidence sink even further than it has in the wake of such a large attack.
But there does not appear to be any U.S. governmental or regulatory entity that could force Binance or other troubled crypto companies to help customers. And minimal regulation is exactly what early crypto enthusiasts wanted, even as the Biden administration tried to rein in the industry before the Trump administration undid much of its work.
Here are some questions and answers about the incident and its implications.
Which Binance customers were vulnerable in this attack?
The hack affected the original Binance (Binance.com), which the company blocks U.S. customers from using (though some probably do so anyway via virtual private networks). There is also a small Binance.Us platform for U.S. users in certain states, which was not part of the hack.
What has Binance said it will do for customers?
In an announcement on its website, the company said it would “cover all losses” using its own funds and its “secure asset fund for users.” The SAFU is an emergency fund that Binance set up on its own. “It is designed to reduce the potential impact on users if an extreme event does happen,” according to the company.
The fund had $1 billion in bitcoin as of 2026, according to the website. The price of bitcoin has fallen about 30% this year, though the company says it replenishes the fund if it falls below $800 million in value.
“User funds are safe,” it added in its announcement. The company has suspended withdrawals for now. “Thank you for your support!” the company said at the conclusion of its update.
What, if any, consumer protections apply to crypto accounts generally in the U.S.?
Not many, though plenty of customers believe otherwise, since there has been automatic deposit insurance at banks for decades.
If the company that holds your cryptocurrency, or provides storage for your digital wallet, is hacked or goes out of business, there are no federal guarantees or rules to help, according to the Federal Trade Commission.
This is unlikely to change anytime soon. In a podcast interview this year, Mike Selig, chair of the Commodity Futures Trading Commission, called for the “minimum effective dose of regulation,” lest it “strangle” industries or be “paternalistic.”
And even if there were robust regulations, it would be hard to enforce them against companies that are not in the United States.
What do brokerages’ customer agreements say about crypto holdings?
They highlight the elevated risks of holding digital assets and underscore that government protections do not apply to crypto.
“The nature of virtual currency may lead to an increased risk of fraud or cyberattack,” Robinhood said in its 37-page agreement. “Any bond or trust account maintained by Robinhood Crypto for the benefit of its customers may not be sufficient to cover all losses incurred by customers.”
A spokesperson for Robinhood said most of its assets were in cold storage, which means access keys are held off the internet.
Fidelity, Coinbase and other brokerages echo that warning. Coinbase also notes that its crime insurance coverage for systemwide cyberattacks does not extend to losses that occur because of a breach or loss of credentials.
“It is your responsibility to use a strong password and maintain control of all login credentials you use to access Coinbase,” it said on its website. Be sure to read all of the fine print.
How does this compare with bank and brokerage safety protections?
When a bank or brokerage firm gets into trouble, there are two major — but different — entities that offer guarantees.
The Federal Deposit Insurance Corp., which is backed by the full faith and credit of the U.S. government, provides depositors with coverage up to certain limits when an insured bank fails.
The Securities Investor Protection Corp., known as SIPC, serves as a backstop for brokerage firms when, for example, one shuts down while it still has active customers with holdings. It’s a nonprofit corporation that was created under the Securities Investor Protection Act of 1970.
SIPC generally covers up to $500,000 of securities, like stocks and bonds, and cash (including a $250,000 limit for the cash component) for each customer. It can be higher for people with multiple accounts.
Even then, according to the SIPC website, it does not protect any digital or crypto asset unless it is deemed a “security,” which generally means it is registered with the Securities and Exchange Commission.
The FDIC and SIPC coverage do not protect against losses due to theft or fraud, which are covered by other rules — and those laws hinge on how the theft or fraud occurred. (SIPC does, however, step in if the brokerage firm was in on the thievery.)
Would President Donald Trump bail out crypto companies if they could not make customers whole?
It’s never wise to bet on a government bailout. But it’s also a reasonable question. The CFTC says on its website that the federal government has no obligation to help, but that doesn’t mean a friendly regulator or politicians wouldn’t do so anyway.
Trump’s family has a large stake in the crypto industry, and his own net worth has grown substantially because of his exposure. A collapse in prices or confidence in companies powering the industry would affect him directly.
In 2023, Binance’s founder, Changpeng Zhao, pleaded guilty to money-laundering violations and eventually spent four months in federal prison. The company also pleaded guilty and agreed to pay $4.3 billion in fines and restitution.
The White House referred a request for comment on the possibility of company or industry bailouts to the Department of Justice, which emailed a statement.
“Binance remains under an obligation to cooperate with law enforcement pursuant to its plea agreement,” it said. “The department remains committed to combating cybercrime, protecting victims and holding accountable those who exploit digital technologies to commit financial crimes.”
Regulators and prosecutors had accused Zhao and the company of allowing terrorists to use the platform. Last year, Trump pardoned him.
This article originally appeared in The New York Times.
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