I am sure you are all aware of the Binance hack that took place two days ago and we are slowly seeing the repercussions unfold. The problem is the obvious security breach which FUD's the entire crypto market placing crypto in a negative light with those in crypto and those looking in from the outside.
The lower cap alt coins felt the brunt of this hack due to the numbers being dumped on the exchange or swapped out. The number of coins flooding the market is not necessarily something that is planned for and the recovery time is the unknown.
The other factor to consider is those playing around with longs and shorts with a token like FUN dropping by 50-90% due to the high liquidity being sold. This is not something that may have happened and you would consider those traders being liquidated unlucky.
I know Binance said they would be making those crypto tokens sold whole again as in buying back what was hacked restocking the Binance hot wallets. That does not make those investors who lost whole again and that kind of sucks.
COTI was one of the cryptos that were unlucky enough to be caught in this mess with 69 million COTI being dumped in 7 transactions. This is the equivalent of 3% of the total supply and is a significant number being dumped in a short period of time.
COTI price plummeted below 1 cent and is only now recovering.
The market was having a red candle period anyway and was dropping with BTC having dropped in price so this thrown on top makes it a double whammy. Will the Binance buying back help recover the COTI value lost or will they have an OTC deal in place that does not impact the market. An OTC is not the best option for the investors, but for Binance I am sure it is the easiest option.
One could imagine if there was 20 million HIVE caught up in this and what type of impact that would have had on the HIVE price if that was dumped.
More than $6 billion in crypto is a very big number and seems far bigger than that to where we are in the current crypto cycle with most of crypto having lost more than 90% of their value over the last 5 years.
I am not concerned about the large cap cryptos with this hack as they will always recover like BTC ETH and LINK which cannot be compared in the same way as FUN, COTI and all the others that were caught up in this. The saving grace compared to other hacks is Binance has the funds to cover these losses and $3 billion of stablecoins was frozen so the entire $6.3 billion was not lost. This alone being able to cover this hack allows Binance to keep face and why regulators like the SEC made it a must have for exchanges to have funds covering for these types of outcomes.
This may actually be a blessing in disguise for Binance proving they can cover for such massive losses and maybe MiCA the EU regulator would look favorably on this. The proof is in the action taken and however a painful loss this will be lessons will be learned and whatever the security weakness was this will be fixed.