Stablecoin Issuers Freeze $2.6 Billion After Binance Outflow

Major stablecoin issuers have joined forces to freeze $2.6 billion in digital assets. The move follows atypical activity in Binance wallets that totaled approximately $6 billion. Tether led the action by freezing over $1.5 billion in USDT linked to the incident.

Circle also participated in the effort by restricting $823 million in USDC. Other companies such as Ripple and World Liberty Financial, which is linked to Donald Trump, blocked $200 million and $27 million respectively. Paxos added to the total by locking over $8 million in PAXG tokens.

Investigations suggest that the suspicious activity began with the use of the EIP-7702 mechanism on the Ethereum network. This feature allowed for the execution of code within a Binance hot wallet. The attacker reportedly transferred large volumes of ETH, USDT and BTC to external addresses within minutes.

Binance stated that it is aware of the security issue and is conducting an active investigation. The company has not yet confirmed the total impact on user funds or the exact nature of the technical failure. The total amount withdrawn from the exchange's wallets remains under scrutiny by market analysts.

The mass freezing of digital assets heightens the perception of systemic risk in the crypto ecosystem and could put pressure on immediate liquidity in decentralized protocols.