Binance creating secure asset fund for users
The exchange plans to appropriate a proportion of its trading fees to compensate users for future incidents.
Binance, the world’s largest cryptocurrency exchange by trading volume, will establish a secure asset fund to protect users after irregular trades forced the suspension of trading and unscheduled system maintenance.
From July 14 the popular exchange will create a Secure Asset Fund for Users (SAFU) to protect against compromising future incidents. The fund will be financed by storing 10% of all trading fees in a cold wallet.
Binance temporarily halted all deposits, withdrawals and other account functions after “odd trading behavior” was reported by Syscoin (SYS), a distributed network that allows low-cost financial transactions. At one point yesterday SYS was sold for 96 BTC (around $640,000). Previously, the coin was valued at around 0.00004 BTC.
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
Syscoin co-founder Sebastien DiMichele told CoinDesk that Syscoin was sold for 96 BTC per unit at one point.
“We saw massive bot activity, our community let us know that they were having trouble with deposits at Binance,” DiMichele said.
A number of Reddit users monitoring Binance’s API logs suggest that 11 SYS were sold at the unusually elevated price. At current market figures, that equates to a total value of around $7 million.
Binance has since completed its system maintenance and resumed all trading activity. In its latest blog post the exchange confirmed that irregular trading of SYS by a number of API users is what caused the disruption.
In order to protect API users, Binance has removed all existing API keys and requests that all API users recreate their keys. The company advised traders who are not regular API users to not create an API key. Binance also warned users not to give any third-party service providers access to personal API keys. Additionally, users have been encouraged to use the IP whitelist functionality to ensure safe accessibility.
Binance confirmed it will rollback all irregular trades. The exchange will also offer zero-fee trading between July 5 and July 14 for those customers negatively affected by choosing to trade the rising SYS price.
Negatively-affected users have also been advised to open a new support ticket.
All Binance users will receive a 70% rebate on trading fees received – not including referrals – between July 5 and July 14 in the form of Binance Coin (BNB) calculated using the closing price on July 14.
Last week, South Korean cryptocurrency exchange Bithumb managed to recover around $14.25 million in stolen funds, a little over one week after hackers made away with $31 million in various digital currencies.
The Federal Bureau of Investigation (FBI) revealed that it currently has 130 different open cases pertaining to cryptocurrency-related crimes, owing to an escalation in illicit activity financed by digital currencies.
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