Within the past fortnight, attackers breached Binance, the largest cryptocurrency exchange in the world, and removed roughly $6.3 billion in digital assets in the space of a few minutes.
Any temptation to cast the thieves as latter-day outlaws, redistributing wealth from speculators, is quickly extinguished. US investigators and blockchain analysts have attributed the attack, with a high degree of confidence, to operatives working on behalf of North Korea. One may feel little sympathy for those who gamble on volatile tokens, yet the sudden transfer of billions to the Pyongyang regime offers no comfort to anyone concerned with weapons proliferation or with the welfare of the country’s long-suffering population.
The aftermath proved just as instructive as the theft itself. Industry actors managed to freeze around $3 billion of the stolen funds, while a further $2.4 billion or so appeared to lie beyond the reach of any issuer able to intervene. Binance, for its part, pledged to cover customer losses in full. In a moment of crisis, a supposedly decentralised ecosystem behaved very much like a conventional financial system, with identifiable authorities able to halt transactions and a central institution standing behind its depositors. However, a large amount of the frozen assets were not in the criminal’s wallets, they had already been used as a guarantee for a loan from a crypto lender for Ethereum, and the hackers had run off with the money from the lender.
The Promise of a Currency Governed by Mathematics
To appreciate why the Binance affair is so significant, it helps to recall what cryptocurrency originally claimed to be. Its founding pitch rested on a deep suspicion of public monetary institutions. Governments and central banks, the argument ran, can create money at will and thereby erode the value of wages and savings. They can freeze accounts, rewrite rules to suit themselves, and otherwise tilt the field against ordinary citizens.
Bitcoin and its successors offered an alternative grounded in code rather than discretion. Supply would be fixed by algorithm, so no authority could quietly debase the currency. Every transaction would be recorded on a public ledger, removing the need to trust intermediaries. Individuals would hold their own wallets, free from banks altogether. In time, enthusiasts predicted, people would pay for everyday goods in crypto and leave behind what they dismissed as outdated fiat currencies such as sterling and the dollar.
The vision was coherent, and for a certain audience it was genuinely compelling. It appealed to a recognisable strand of libertarian thought, and it arrived in the wake of the 2008 financial crisis, when public trust in banks had collapsed. The question posed, nearly two decades later, is simply whether any of it came to pass.
From Currency to Speculative Asset
The answer is unequivocal: almost none of it did. Bitcoin, ether and the many tokens that followed are rarely used as money in any meaningful sense. They function instead as speculative instruments, acquired in the hope that their price will rise and that a later buyer will pay more. The only thing you can buy with crypto is… well, crypto.
A currency is judged by its stability as a store of value, its reliability as a medium of exchange, and its usefulness as a unit of account. An asset whose price can swing dramatically within a single week struggles on all three counts. What remains is a market sustained largely by expectation, a classic setting for what economists describe as greater-fool dynamics.
There is a constant stream of new coins promising extraordinary returns, alongside an equally constant stream of investors losing their savings. Celebrity tokens have become almost a genre of their own; whenever someone attracts sufficient viral attention, a coin tends to follow, and the admirers who buy it are usually the ones left holding losses. For those inside the bubble, he suggests, this may feel like an exhilarating ride. From the outside, it looks rather more like a casino with a sophisticated vocabulary.
The Quiet Return of the Intermediary
The ideal of self-custody has fared little better. Holding one’s own keys sounds empowering until one loses them. Ball points to a series of well-publicised cases in which individuals mislaid wallets containing fortunes, most notoriously a British case involving a hard drive, allegedly worth around £460 million in bitcoin, that ended up in a landfill site. Others were robbed or hacked outright. Faced with these risks, many users concluded that they preferred institutions after all.
The institutions they turned to, however, have hardly inspired confidence. FTX, once the second-largest exchange, collapsed amid fraud, and its founder Sam Bankman-Fried is now serving a 25-year prison sentence. Binance survived as the dominant player, yet its own founder, Changpeng Zhao, was convicted of offences connected to money laundering before receiving a pardon from Donald Trump.
There is a striking irony here. A technology designed to eliminate trusted third parties has produced some of the most concentrated custodians in modern finance. When so much value sits within a single exchange, that exchange becomes a single point of failure, and the recent theft demonstrates precisely what such concentration can cost.
Re-enacting the History of Banking, Without the Benefits
The most illuminating part of the argument is historical. The crypto sector is effectively speed-running the excesses of banking in the late nineteenth and early twentieth centuries. The same features recur; speculative bubbles, transparent frauds, and an anxious search for mechanisms that might reassure customers their money is safe.
The historical parallel is apt, but the comparison is not flattering. When modern finance took shape, its architects were improvising. Panics, failures and ruined savers were the painful price of learning how to supervise a genuinely new and useful sector. Over time, those lessons produced the institutions we now take for granted, such as supervisory regimes, deposit protection, and central banks able to act as lenders of last resort.
Crypto, by contrast, is repeating the suffering without the corresponding gain. Banks and financial regulation already exist, and the industry was built expressly to escape both, and it now finds itself reconstructing similar safeguards piecemeal, one failure at a time. The freezing of stolen funds and Binance’s promise to compensate users are, in effect, improvised versions of tools that conventional finance developed generations ago. We must ask what, precisely, has been gained by the detour.
Security in an Age of Automated Vulnerability
Artificial intelligence is now uncovering weaknesses in the architecture of the internet at a remarkable pace, and digital assets that depend entirely on online security are correspondingly exposed. Many people, unfortunately, are discovering this the hard way.
The point deserves emphasis because it cuts against one of crypto’s central virtues. Irreversibility was presented as a feature; no bank could block or claw back a payment. When a conventional transfer is fraudulent, legal and institutional channels exist to contest it. When a blockchain transaction is executed by a skilled adversary, recovery depends on whether the relevant tokens happen to be controlled by an issuer willing and able to freeze them. In the Binance case, that condition held for only part of the haul.
Crypto has come to symbolise the emptiness of much twenty-first-century speculation, including lavish promises of wealth, with little of tangible substance offered in exchange.
Political Patronage
The final strand of the argument concerns politics. The industry’s choice of allies reveals a good deal about its character. In the United States Donald Trump and members of his family have launched their own tokens, which are basically as pump-and-dump schemes that enriched insiders at the expense of ordinary buyers. Crypto money helped fund Trump’s election campaign, supports his business interests, and has been rewarded accordingly.
The British dimension is also significant. Reform UK has become a major recipient of donations from crypto billionaires, a theme examined elsewhere in the same publication. Both the industry and its political champions promise a great deal, deliver little of substance, and leave believers checking for their wallets.
When a financial sector depends heavily on political patronage rather than on demonstrable utility, its long-term legitimacy becomes vulnerable to every change of government.
Weighing the Counterarguments
A fair assessment must acknowledge that defenders of the sector would read the same events differently. They might argue that the rapid freezing of half the stolen assets, together with Binance’s guarantee to its users, shows an industry that is maturing rather than collapsing. They would also point to genuine use cases, particularly dollar-linked stablecoins employed for cross-border remittances or as a refuge from inflation in fragile economies. Some would draw a distinction between blockchain technology itself and the speculative excesses that have grown up around it, and would note that regulatory frameworks in Europe and elsewhere are steadily drawing the sector into the supervised perimeter.
If crypto becomes acceptable chiefly by acquiring custodians, regulators, compensation schemes and the capacity to freeze transactions, then it increasingly resembles the system it was designed to replace. The burden then falls on its advocates to explain what distinctive value remains once those safeguards are in place.
Concluding Reflections
The Binance theft will probably fade from the headlines, as the industry would clearly prefer. Its significance, however, lies less in the sum stolen than in what the response revealed. A movement that promised to free money from institutions now relies on institutions to rescue it, and on political favour to protect it. The episode poses a question that the sector has yet to answer convincingly: after more than fifteen years, what problem does crypto solve that existing finance cannot?
Sources
- James Ball, The New World, 4 November 2026
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