Syscoin (SYS) Maintains Suspicious Transaction Activity Was Unrelated to Binance Trading Irregularities

Francisco Memoria
  • Syscoin's team has recently stated that there was a glitch in its blockchain, unrelated to Binance.
  • Exactly what happened to Binance's orderbooks, which saw a user buy one SYS for 96 BTC, is still unclear.

Suspicious activity has recently been detected on Syscoin’s (SYS) blockchain, at about the same time leading cryptocurrency exchange Binance saw trading irregularities on trading pairs involving the cryptocurrency. Per the team behind SYS, the suspicious activity is unrelated to Binance’s situation.

The cryptocurrency’s network recently processed blocks with “output values larger than Syscoin’s entire token supply,” which saw various analysts believe it had been compromised. Speaking to The Next Web, Syscoin’s team clarified that this was due to a new policy.

The policy involved a mandatory update to fix a governance superblock fee calculation bug, that required the cryptocurrency’s miners to upgrade their software client until July 3. Per reports, large miners who upgraded set higher fee above the network’s usual rate.

This left smaller miners picking up transactions whenever they managed to get a block, which “led to hundreds of transactions bunched up in large output value blocks.” Per Syscoin’s team, this behavior was expected. Writing to the publication, they stated:

Syscoin blockchain has not been hacked or compromised in any way. What took place on [July 3]  was a combination of events that made the situation more sensational than it needed to be.

Syscoin team

Suspicious, however, was that a wallet with 46 million SYS reportedly started sending withdrawal requests, which added up as unconfirmed transactions on its blockchain. In response the crypto project’s team promptly ask exchanges to halt trading.

Trading Irregularities

While Bittrex and Poloniex reportedly complied almost immediately, Binance attempted to figure out what was going on. At about the same time, Syscoin started pumping on the exchange, to the point one user purchased one SYS, worth about $0.19 at press time, for 96 BTC – about $640,000.

This saw Binance quickly halt trading and withdrawals as well. The company has since reset the API keys of its users as the problem was seemingly related to them. Syscoin pointed out that despite halting withdrawals, users noted a 7,000 BTC withdrawal was made from the exchange at the time things went awry.

Some users, per TNW, reportedly claim to have seen their balances be negatively affected by the situation. Syscoin itself claims the problem wasn’t related to Binance as it was a glitch in its blockchain, making it unclear what caused the problems on the leading cryptocurrency exchange.

A theory assumes hackers compromised users’ API keys and used them to pump the cryptocurrency, so they could sell it from their own accounts at a premium and then withdraw BTC.

As CryptoGlobe covered, Binance has since responded to the incident by rolling back irregular trades and launching a security fund for users, dubbed the Secure Asset Fund for Users (SAFU), which will see it allocate 10 percent of all trading fees to protect users in extreme cases.

Featured image from Pixabay.