Binance, the world’s largest cryptocurrency exchange, suspended trading as a temporary measure on Wednesday after spotting ‘irregular’ transactions of SYS tokens on its platform.
The exchange said it had temporarily suspended trading and withdrawals for “system maintenance” following the unusual trading patterns of Syscoin (SYS) on its platform. Binance has since resumed trading activities and it has been confirmed that all funds are safe.
An order for the purchase of 1 Syscoin in exchange for 96 BTC was placed and successfully completed. This unusual trade caused panic and hysteria because it could’ve been a result of a hack, a platform glitch or simply a mistake while placing an order.
Subsequently, Syscoin announced that they were looking into a potential issue on their network and requested exchanges to halt trading while they investigated the issue.
Following the suspension of trading, Binance announced it would be revoking all existing API keys and urged users to recreate their API keys.
“Due to irregular trading on some APIs, Binance will remove all existing API keys as a precautionary security measure. All API users are requested to recreate their API keys.” the statement said.
This move indicates that they were investigating the possible misusage of their API for the unusual trading activity of the SYS/BTC pair.
The Syscoin block explorer indicated more than a billion SYS coins under the “Value Out” parameter. Several users and news outlets have speculated over a possible exploitation of the Syscoin protocol to mint new coins, given the maximum supply is currently capped at 800M, and a connection to the subsequent trading activity on binance.
However, on further review, it was clear that it wasn’t an exploit but simply a user moving 45M coins multiple times within the same block. In a tweet, Syscoin made clear that “After investigating the #Syscoin blockchain is safe. We are asking exchanges to reopen.”
In a statement, Keyare, Syscoin team developer, stated “We saw suspicious activity and to mitigate risk, asked exchanges to halt trading while we investigated. Bittrex and Poloniex took immediate action and Binance launched their own investigation. Our tweet was accurate but misinterpreted as a “hack” by media.”
“There was no exploitation of the Syscoin blockchain. There was no minting of coins. The blockchain shows this. It was a series of events that coincided with extremely odd movements in Binance. We will have an official report later today.” he further stated.
In an official post-incident statement, Binance stated:
“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.”
Binance also announced that it has rolled back irregular trades. They also stated that 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. The company would also compensate all the users with a 70% rebate on trading fees between 5th and 14th july in the form of BNB for the downtime.
Syscoin is a bitcoin fork aimed at being a decentralized marketplace protocol. It was listed on Binance at the end of March this year.
Earlier this month, Syscoin announced that their Github account was compromised and a hacker replaced their windows client with a version with a malicious trojan that steals user funds. Users who downloaded their client within this period were urged to upgrade the software to ensure the safety of their holdings.
Featured image from Shutterstock.
Last modified: May 20, 2020 6:55 PM UTC