The night Binance suspended withdrawals, where did liquidity go?

Binance suspended withdrawals for roughly 56 hours after a hot-wallet hack on Oct. 29, 2026, with losses estimated at $5.91 billion by Chainalysis and $6.36 billion by TRM, which attributed the theft to North Korea's TraderTraitor; spot and futures trading continued throughout. In the week after, Binance's share of top-10 spot volume fell to about 42% from 48%, while OKX rose to 14% from 11%, though post-resumption flows show only about a tenth of withdrawn funds reaching other centralized exchanges and Hyperliquid's single-day net inflow under a tenth of Binance's net outflow. BTC fell 3.1% to about $76,400 and ETH dropped 4% to roughly $2,170, while derivatives volume jumped 74% to $346.1 billion and liquidations totaled about $1.57 billion, half on Binance. The hacker's forced USDT-to-ETH conversion (about 325 million USDT for 122,300 ETH at an implied $2,657 versus a $2,300-$2,350 market price) created about $119 million in execution losses, with arbitrageurs netting roughly $60 million and Ethereum builders and validators taking about $29.5 million. The episode matters because blocked withdrawals prevented arbitrageurs from rebalancing inventory across venues, widening price gaps such as Coinbase's largest-of-the-year BTC discount to Binance's USDT price, and it shifts attention to whether trading migrates to DEXs, which handled about 23% of CEX spot volume in October, and to how much counterparty risk market makers keep on individual exchanges.