Binance Announces Secure Asset Fund for Users (SAFU) in Syscoin Incident Aftermath

  • In a new update, Binance detailed what happened for it to halt withdrawals over irregular trades.
  • It announced a Secure Asset Fund For Users (SAFU) that will consist of 10% of received trading fees.
  • Its goal is to protect users affected in situations like these.

Leading cryptocurrency exchange Binance has recently announced the creation of a user safety fund called “Secure Asset Fund For Users (SAFU)” in the aftermath of trading irregularities that saw at least one user purchase one Syscoin (SYS), worth about $0.26, for the equivalent of $625,000 in bitcoin.

In an update going over the irregular trades the exchange detected, Binance announced that they came from a number of its API users, and that these triggered its internal risk management system.

Once the system was triggered, the company decided to halt trading, withdrawals and other functions until it figured out what was going on. Since the problem came from users’ API keys, these were removed and those using them were asked to recreate their keys.

Notably the incident affected the trading pairs of Syscoin, a cryptocurrency that has well over 90 percent of its trading volume concentrated on Binance. While the token is at press time trading at $0.26, the irregular trades saw a user pay 96 BTC for one SYS.

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Binance’s announcement details that it’ll rollback all irregular trades, and compensate those negatively affected by offering them zero-fee trading between July 5 and 14. All other Binance users will receive a 70 percent rebate paid in BNB, a cryptocurrency that's been bucking the bearish trend, on trading fees paid during said period.

The exchange added that to “protect the future interests of all users,” it’s set to create a Security Digital Asset Fund for Users (SAFU). The post reads:

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.

Binance

Near the end of its update, it noted that its core values see it protect its users, and that given the explosive growth it had it’s bound to face challenges. To face these challenges, the post reads, community comments and suggestions are welcomed.

Per various analysts the Syscoin pump wasn’t coincidental, as bad actors could’ve been trying to manipulate the market through a third-party trading bot with access to API keys. By compromising said bot, the bad actors could’ve just used various accounts to pump SYS, and then sell their own tokens at an inflated price.

This attack method means neither Binance nor SYS’ blockchain were hacked, but a third party. Whether the hackers managed to withdraw their funds wasn’t clarified, although we assume Binance managed to stop them as it’s rolling back irregular trades.

Binance on Security

Going forward, Binance asked users not to create an API key if they don’t regularly use them, and to not share access to their keys with any third-party service providers. To enhance security, it further asked users to use its “IP whitelist” functionality, to ensure they’re the only ones with access to their API keys.

This is notably not the first time Binance thwarts a potentially malicious attack. As CryptoGlobe covered, the company thwarted a large-scale theft attempt earlier this year, that saw hackers attempt to manipulate the price of Viacoin (VIA) in a similar way.

In said attack, the hackers used phished accounts to pump Viacoin’s price, so they could dump their own tokens and then withdraw in BTC. The irregular pump triggered Binance’s security systems, which halted withdrawals and let to the hackers losing money.

Ripple Raises $200 Million in Funding Round Valuing It at $10 Billion

Ripple, the company that helped created the XRP token, has revealed it raised $200 million in a Series C funding round that valued the firm at $10 billion.

According to Ripple’s announcement, the funding round was led by New York investment company Tetragon, and saw Japan’s SBI Holdings and Virginia-based venture capital firm Route 66 Venture participate in the round.

The company, which was founded in 2012, added that the investors “not only underscore Ripple’s long-term potential,” but will also offer “invaluable industry insight and expertise” as its partners to help Ripple’s business grow.

Its CEO Brad Garlinghouse was quoted as saying:

We are in a strong financial position to execute against our vision. As others in the blockchain space have slowed their growth or even shut down, we have accelerated our momentum and industry leadership throughout 2019.

Ripple uses the XRP token to facilitate cross-border transactions for financial institutions, and has created a blockchain-based interbank messaging system. A significant portion of its income comes from selling its XRP holdings, which some of the cryptocurrency’s investors have criticized, to the point Garglinhouse had to defend the practice.

The firm’s revenue also comes from deals with banks and other financial institutions that use its technology, and says it has over 300 financial services customers throughout the world. One of them, SendFriend, has revealed it’s seeing massive savings in remittance fees through the use of XRP thanks to Ripple’s product powered by the token called “On-Demand Liquidity” (ODL).

Ripple also has partnership deals with industry giants, which include Santander and American Express. It has invested millions into MoneyGram, one of the world’s largest money transfer companies, to help it continue increasing the volume and use of ODL.

Featured image via Pixabay.