Binance, the world’s largest cryptocurrency exchange, temporarily suspended their trading operations on Wednesday following unexpected transactions of SYS tokens on their platform. Even though the trading has since resumed, the reasons for the attack remains a grey area.
Since exchange hackings and cryptocurrency thefts has seen a dramatic rise in 2018, the go-to explanation for the anomaly was a hack on the blockchain. Turns out that’s not the case.
Binance posted a detailed explanation referring the irregular trading and trading suspension. The suspension came after a single Syscoin was purchased for 96 Bitcoin on the exchange. Tweets from both Syscoin and Binance twitter feeds confirm that crypto exchange has halted all transactions.
Early reports indicate that the events that occurred on the Binance trading platform were the result of an exploit of the exchange’s API which reportedly effects all coins on Binance, not just Syscoin. Soon they had to remove all existing API keys, they asked all API users to recreate their API keys.
Creation Of Secure Asset Fund For Users (SAFU) Fund
From the post-incident statement provided by Binance, they said:
“To protect the future interests of all users, Binance will create a Secure Asset Fund for Users (SAFU). Starting from 2018/07/14, we will allocate 10% of all trading fees received into SAFU to offer protection to our users and their funds in extreme cases. This fund will be stored in a separate cold wallet.”
Notably, they also announced that it has rolled back irregular trades. They would provide zero fee trading on their platform between 5th and 14th July for all the users who were negatively affected during the unusual SYS trading activity. Not only this but the company would also compensate all the users with a 70% rebate on trading fees between 5th and 14th of July in the form of BNB for the downtime.
Cold Wallet For Safety
Binance worked quickly to suspend trading and APIs, rollback irregular trades, offer free transactions and set up a cold wallet fund for any investor affected by the event. The official report said:
“Starting from 2018/07/14, we will allocate 10% of all trading fees received into SAFU to offer protection to our users and their funds in extreme cases. This fund will be stored in a separate cold wallet.”
There is no word regarding the potential exchange-wide API compromises, but it does not seem to be a real issue currently.