Lummis says CLARITY Act would have let exchanges freeze Binance hack funds sooner, Better Markets disputes her reading

Senator Cynthia Lummis says the stalled CLARITY Act would have given crypto firms legal cover to freeze suspicious transactions the moment law enforcement called, as Binance works to recover funds from the $6.3 billion hack it reported on October 29, 2026. Better Markets disputes her reading of the bill. Binance says about $3 billion of the stolen assets has been frozen on-chain.

“The Clarity Act would have given crypto firms legal cover to freeze suspicious transactions the instant law enforcement calls,” Lummis wrote. “Every minute lost is money gone for good.”

Her comments have brought renewed attention to the legislation, which aims to establish a federal regulatory framework for digital assets and clarify the responsibilities of U.S. financial regulators.

The senator’s argument centres on the legal risks crypto companies may face when restricting transactions or temporarily holding assets in response to suspected criminal activity. She maintains that clearer protections could help firms act without fearing private lawsuits for taking certain steps in good faith.

Binance reports $6.3 billion in unauthorised withdrawals

The debate follows a major security incident disclosed by Binance in late October. The exchange reported that attackers compromised its hot-wallet infrastructure and withdrew approximately $6.3 billion worth of digital assets.

Binance said its initial investigation indicated that the incident may have involved a compromised laptop. The exchange subsequently reported that investigators were examining additional points of intrusion and had not found evidence that wallet private keys were compromised.

The company said it would cover the losses through its Secure Asset Fund for Users and corporate funds, setting aside more than $6.34 billion to address the incident. Binance also said it was working with law enforcement, blockchain analytics firms, asset issuers and industry partners to trace and freeze affected assets.

According to the exchange’s October 30 security update, approximately $3 billion in assets had been frozen on-chain as recovery efforts continued. Binance temporarily suspended withdrawals while conducting additional security checks and working to restore services safely.

The incident has intensified scrutiny of how centralised cryptocurrency exchanges protect customer assets and respond to unauthorised transactions. It has also raised questions about whether existing legal frameworks provide sufficient clarity for exchanges and other digital asset businesses when cooperating with law enforcement.

Lummis has presented the incident as an example of why she believes Congress should advance the CLARITY Act. Her argument, however, remains a claim about the potential benefits of the proposed law, not proof that its provisions would have stopped the attack or enabled the recovery of all stolen funds.

Dispute emerges over what the CLARITY Act allows

Lummis’s comments prompted a public disagreement over how the proposed legislation would apply to crypto companies and asset freezes.

Amanda Fischer, chief operating officer and policy director at Better Markets, challenged the senator’s interpretation. Fischer argued that the legislation’s provisions concerning payment stablecoin issuers required compliance with qualifying court orders to freeze assets.

Lummis responded that Fischer was relying on a savings clause, which preserves existing financial and sanctions laws rather than cancelling other provisions of the legislation.

In a follow-up post reported by crypto news outlets, Lummis said the bill would classify Binance as a “covered person” because it operates as a digital asset service provider. She argued that the proposed framework would give authorities and companies better tools to respond to illicit activity.

The distinction matters because the bill contains different provisions addressing temporary holds and compliance with lawful freeze orders.

Under the relevant draft language, covered entities could receive protection from certain federal or state private lawsuits when voluntarily implementing temporary holds in good faith under specified conditions. These conditions include a reasonable belief that a transaction is linked to a violation of law or a qualifying written request from a government agency.

The draft separately addresses payment stablecoin issuers’ obligations to comply with qualifying court orders to freeze or prevent transfers of stablecoins.

These provisions do not mean every crypto company would automatically be required or authorised to freeze any transaction whenever law enforcement makes an informal request. The precise legal conditions, type of entity and nature of the request would matter.

The proposed protections also would not guarantee that an exchange could identify or stop an attack before funds were stolen. Instead, they could affect the legal position of covered entities when responding to suspicious activity under the circumstances described in the bill.