Binance said Friday that around $3 billion in cryptocurrency assets had been frozen following a potential security breach at the exchange, but recovering the funds could prove more complicated.Several crypto firms, including stablecoin issuers Circle and Tether, moved to freeze funds linked to the suspected incident on Thursday, while Binance said it would cover all losses and had temporarily suspended deposits and withdrawals as it investigated the issue.But compensating customers and recovering stolen assets are two separate processes.Asked by CNBC whether frozen crypto assets could be recovered and returned to their rightful owners, Ari Redbord, global head of policy at blockchain intelligence firm TRM Labs and a former U.S. federal prosecutor and Treasury official, said. “A freeze stops the money from moving, and recovery follows through legal process.”Redbord said law enforcement typically obtains a court order or seizure warrant before working with stablecoin issuers to release or reissue assets and return them to their rightful owners.”Stablecoins are the most recoverable asset class in crypto because the issuer controls the token contract,” Redbord said. “Tether and Circle can freeze, burn and reissue, which allows frozen USDT and USDC to be returned to a victim.”But the process of returning frozen funds can take longer.”The freeze takes minutes. Returning the money takes longer, but the path exists,” he added.Recovering cryptocurrencies such as bitcoin and ether presents a greater challenge because they have no issuer that can directly freeze the assets, according to Redbord.Instead, investigators must trace funds as they move through exchanges, bridges and other crypto services, where suspicious transactions can be flagged and potentially intercepted.”Bridges, swap services, exchanges and OTC desks each become a point of interdiction,” Redbord said.Redbord said roughly $2.4 billion in USDT and USDC had been frozen, while an estimated $2.4 billion in bitcoin and ether remained under the attacker’s control, beyond the direct reach of stablecoin issuers.”A freeze is the first step toward lower losses,” he said. “Losses fall once frozen funds are released to the rightful owner, and that step comes after the freeze.”Investigators must trace funds as they move through exchanges, bridges and other crypto services, where suspicious transactions can be flagged and potentially intercepted, Redbord added. Separately, blockchain analytics firm Chainalysis estimated that approximately $5.91 billion had been stolen at the time of the suspected breach.Eric Jardine, head of research at Chainalysis, said freezing assets can prevent further transfers while investigators trace the funds, but returning them requires coordination among law enforcement, exchanges and token issuers.”There is no standard recovery timeline. A technical freeze may happen quickly, while returning funds can take months or years,” Jardine told CNBC.Jardine added that while bitcoin and ether cannot be frozen by an issuer, they can still be traced and potentially recovered. Investigators can trace the funds on public blockchains and intervene when they reach a cooperating exchange or another centralized platform, he said.Bitcoin fell more than 4% to below $78,000 on Friday as concerns over a potential security breach at Binance rattled cryptocurrency markets.
Click Here For The Original Source.
——————————————————–
