Alex ZonneveldAfter the largest theft in the history of onchain finance, the first thing an allocator wants to know is no longer how a strategy performs, but where the assets sit while it does.
On 29 October 2026, attackers took about $6.3 billion from Binance’s hot wallets in roughly twenty minutes, the largest theft ever recorded. For managers running strategies on exchanges, the consequence is simple: every allocator considering an allocation now wants to know, before anything else, where the assets will sit while the manager trades, who can move them, and what would happen if the venue failed. A manager who can show that assets stay with an independent custodian, that the manager can trade but never move them, and that the allocator can verify all of this directly, removes the largest single objection in due diligence before it’s raised.
Why the question has moved to the top
Allocators have always asked about custody, but the question used to sit somewhere in the middle of a long questionnaire. The events of the past two years have moved it to the front. Bybit lost $1.5 billion from a cold multisig wallet in February 2025 after attackers deceived its signers, Bitget lost about $351.6 million from its hot and warm wallets in September 2026, and then Binance lost $6.3 billion in October. Binance has said it will cover its customers’ losses from its own funds, but allocators understand that this was a choice made by a large, well-capitalised firm, and not a protection they can rely on everywhere.
For an allocator, the uncomfortable truth is that a manager’s trading skill counts for nothing if the assets aren’t there. That’s why custody now tends to be the first question, and why a vague answer tends to end the conversation.
What allocators want to hear
The answer allocators are looking for has a few clear parts. They want assets held with an independent, institutional custodian rather than in an exchange’s wallets. They want a clear separation between the right to trade and the right to move assets, so the manager can execute the strategy but can’t send capital anywhere outside the arrangement. They want signing to require more than one person, with each signer able to verify the real transaction. And increasingly, they want to be able to check all of this for themselves, without relying on an assurance letter or the manager’s word.
Off-exchange settlement has become the standard way to meet these expectations for exchange-traded strategies. The assets stay with the custodian, the exchange is shown a mirrored balance that the manager trades against, and gains and losses are settled periodically between custodian and exchange. The same model now supports tokenised money market funds as collateral, with Binance accepting BlackRock’s BUIDL since November 2025 and Franklin Templeton’s tokenised fund shares, held by Ceffu, since February 2026.
Custody as a selling point
For a manager, a strong custody structure isn’t only a defensive measure. It’s one of the most persuasive things they can show an allocator, because it answers the question that sits behind every other question, which is whether the capital will still be there. A manager who can say “you can check where the assets are yourself, at any time, and I can’t move them” has changed the nature of the relationship, from one that depends on trust to one that’s built on evidence.
That also shortens due diligence. Questions about custody, segregation and counterparty exposure that would otherwise take weeks of correspondence can be answered by pointing to a structure the allocator can see.
How MakeBanc handles custody
On MakeBanc, allocators’ assets sit with an institutional custodian in a vault they sign for. The manager can trade but can never move the assets, and MakeBanc never holds the keys. Allocators can verify the vault, the signing arrangements and the custodian balance on a public ledger without asking anyone, and they can require two or three named signers before anything changes. For the manager, that means custody, reconciliation and NAV run underneath from day one, and the custody question in due diligence has a clear, verifiable answer.
MakeBanc provides infrastructure to independent managers and doesn’t provide custody services itself. Custody is provided by the institutional custodian, and MakeBanc doesn’t hold, move or control allocators’ assets.
Frequently asked questions
How should fund managers answer custody questions in due diligence? By showing that assets are held with an independent institutional custodian, that the manager can trade but not move assets, that signing requires several people with on-device verification, and ideally that the allocator can verify custody directly rather than relying on the manager’s word.
What is off-exchange settlement? It’s an arrangement in which a manager’s assets stay with an independent custodian while the exchange shows a mirrored balance to trade against, with gains and losses settled periodically. The assets don’t sit in the exchange’s own wallets.
What happened in the Binance hack? On 29 October 2026, attackers attributed to North Korea’s TraderTraitor group compromised Binance’s hot wallet signing infrastructure and took about $6.3 billion across ten blockchains in roughly twenty minutes. Binance said it would cover customer losses from its own funds.
Sources
- TRM Labs, North Korea steals USD 6.36 billion from Binance, October 2026
- Wikipedia, 2026 Binance hack
- investingLive, Hackers drain $351.6 million from Bitget, September 2026
- Check Point Research, The Bybit incident, 2025
- Fireblocks, Bybit hack exposes risks: why off-exchange settlement is essential
- Cointelegraph, Binance accepts BlackRock’s BUIDL as off-exchange collateral, November 2025
- Franklin Templeton, Franklin Templeton and Binance off-exchange collateral program, 2026
MakeBanc is a technology platform that provides infrastructure to independent asset managers and connects them with investors. MakeBanc does not provide investment advice, custody services or banking services. No structure removes all risk.