The staggering digital hack at Binance, where criminals made off with $6.3 billion in digital coins in a breach that the company revealed yesterday, 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 already 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 S.A.F.U. 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 percent 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 any time soon. In a podcast interview this year, Mike Selig, the 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.
How does this compare to 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 Corporation, 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 Corporation, known as S.I.P.C., which serves as a backstop for brokerage firms, says when 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.
S.I.P.C. 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 S.I.P.C. 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.
F.D.I.C. and S.I.P.C. 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. (S.I.P.C. does, however, step in if the brokerage firm was in on the thievery.)
Would President 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 C.F.T.C. 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.
The White House did not immediately comment.
Mr. 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.
And Mr. Trump seems to think highly of Binance, or at least its founder, Changpeng Zhao. In 2023, Mr. Zhao pled guilty to money-laundering violations and eventually spent four months in federal prison. Regulators and prosecutors had accused him and the company of allowing terrorists to use the platform.
Last year, Mr. Trump pardoned him.
The post What Protections Exist for Binance’s Customers? appeared first on New York Times.
