Binance froze withdrawals of a staked Ankr protocol token Friday.
The exchange's chief executive Changpeng Zhao said the crypto could have been targeted by hackers.
The Ankr coin's price crashed 99.5% in the past 24 hours, sparking fears of an attack.
Binance said Friday that it will freeze withdrawals of a cryptocurrency that derives part of its value from a link to the exchange's own native Binance Coin token.
Chief executive Changpeng Zhao said withdrawals of Ankr's Reward Bearing Staked BNB coin would be paused while Binance probed a potential attack by hackers.
The token, which held around $123 million of assets and was intended to offer Binance Coin holders returns via staking, crashed 99.5% Friday to trade at $1.51.
"Initial analysis is developer private key was hacked, and the hacker updated the smart contract to a more malicious one," 'CZ' said on Twitter. "Binance paused withdrawals a few hours ago."
Binance has also frozen around $3 million that hackers moved to its centralized exchange, he added.
Hackers have relentlessly targeted digital assets in 2022 with more than $3 billion wiped from the sector this year, according to Chainalysis.
Binance's freezing of Ankr's token comes at a time when investors are worrying about contagion from the implosion of rival exchange FTX and a brutal crypto winter that has seen bitcoin's price fall 63% year-to-date, with the token trading at just under $17,000 at last check.
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