Single Syscoin (SYS) Trade for 96 BTC Triggers Binance Risk Management
It was a busy night for the popular cryptocurrency exchange, Binance. There system triggered an internal risk management that there was some irregular trading happening with one of the listed coins, Syscoin (SYS). It appears that a single SYS coin sold for 96 Bitcoins or roughly $630,000 USD.
The Incident Rundown
Here is a brief rundown of how the night went.
- 8:48 PM (EST) Binance announces they will shut down trading and withdrawals for system maintenance
- 10:26 PM (EST) Minor details were given that they found irregular trading on some API's and that all APIs would be removed
- 11:15 PM (EST) All APIs have been removed and users can now create new APIs. Trading is still suspended
- 3:27 AM (EST) System maintenance is complete and trading will open in a few hours. Users can cancel orders, process deposits and withdrawals.
- 4:54 AM (EST) Binance announces a recap of irregular trading with SYS which tripped an internal risk management system. SAFU to be created. Irregular trades have been rolled back and 70% rebate on trading fees in the form of BNB.
What Exactly Happened During The Irregular Trading?
Binance has set them selves up with a solid foundation of finding trading irregularities and stopping them before they become too big of an issue. That was the case last night when their internal risk management system alerted them of irregular trading with Syscoin (SYS). As we mentioned above, a single SYS (worth about $.221 at the time) sold for 96 Bitcoins (worth about $630,000).
We are investigating a possible issue on the Syscoin blockchain, nothing is confirmed but we have asked for exchanges to halt trading while we investigate.
— Syscoin (@syscoin) July 3, 2018
If you look at the chart below you can really see how big of a jump this was:
One twitter took a video of what the trading looked like over a 1-min chart:
— CryptoTutor⚡️ (@CryptoTutor) March 7, 2018
Was the Issue Only on Binance?
Not only were there huge spikes in trading of SYS, but Syscoin believes they have had issues within their blockchain, in particular, block 87670. If you look at the block explorer it shows that more than 1 billion SYS was transacted in this block, which is a large number in itself, but there are only 888 million SYS in supply.
Some are claiming there was a 51% attack to create more supply. Syscoin announced overnight that they investigated their blockchain and it all appears to be safe and that exchanges can re-open trading.
It looks like they will post more details today on what they found in their investigation.
As a precaution we had requested exchanges halt $SYS deposit/withdrawal today after we observed odd trading behavior coupled with atypical blockchain activity. After investigating the #Syscoin blockchain is safe. We are asking exchanges to reopen. Detailed wiki post tomorrow. pic.twitter.com/NEypr531zi
— Syscoin (@syscoin) July 4, 2018
'Funda are Safu' – The API for the @syscoin blockchain was not exploited rather @binance 's API was exploited and apparently affecting all coins on Binance. Syscoin team confirmed their Blockchain is secure and worked as expected. Will update more.
— Shash (@emailshashwat) July 4, 2018
What Did Binance's Investigation Find?
Due to their quick actions, Binance was able to shut down all deposits, trading, and withdrawals allowing them to find the issue and resolve it.
Update: things are under control, just have some more work to do before enabling trading. Should be soon. Ignore FUD and bad news. Now is an good time to identify which news are bad quality (and remove them).
— CZ (@cz_binance) July 4, 2018
API's Shut Down & Available for Recreation
Since all of the irregular trading was happening via APIs, the best way for the exchange to deal with the issue was the remove all existing APIs so that they could stop the trading at the source.
Now that they have removed all existing APIs, users will need to go back in and create new ones. If you had them created for an auto trading bot, tax software access, or for any portfolio apps, you will need to go back and re-create them. Binance is urging users to take extreme caution when using their APIs. Check that the website or app that you are giving your information to is credible. Whitelist your IP address so that only you can access your keys.
Trades Rolled Back & Zero to 70% off Trading Fees
Since the issue has been fixed, Binance has rolled back all of the irregular trades. They have also announced that any user that was negatively affected will be able to trade July 5th to July 14th without any fees.
In order to take advantage of this, you will need to create a support ticket. They also took it a step further, in that they are allowing all other traders a 70% rebate on trading fees (in the form of BNB) since the exchange was shut down.
Secure Asset Fund for Users (SAFU) Protection
— CZ (@cz_binance) July 4, 2018
In order to provide further protection and future compensation, Binance has setup Secure Asset Fund for Users (SAFU) which is a separate cold storage wallet that will be funded with 10% of all trading fees starting on July 14th. This will be used to provide compensation to users in case there is a hack on the exchange.
In the end, everything was fixed and all issues have been rolled back. As you can imagine, this is one very big reason that traders keep coming back to this exchange. Their quick actions help keep users crypto safe.