A single Syscoin, worth about USD 0.25, was inadvertently sold for BTC 96 (USD 6.3 million) on Binance on 3 July 2018. This unusual trading activity prompted a temporary suspension of the entire exchange. When trading resumed, new policies were announced by Binance, including a Secure Asset Fund for Users (SAFU) that will compensate customers in the event of extreme losses of cryptocurrency in the future.

Apparently, a number of application programming interface (API) users on Binance were conducting irregular trades, suggesting the API system had been compromised. API is used to program trading bots and, in general, to interact with Binance using a server. Binance revoked all API keys and asked users to make new keys. It suggests users take good care of their API keys by not trusting the keys with third parties, and by using the IP whitelist so no other computers can use their API key.

Irregular trades were rolled back, including that accidental BTC 96 trade. Since this appears to have been a hacking situation via the API, it is probable that the Bitcoins were withdrawn and Binance had to bear the loss. Binance is one of the world’s largest cryptocurrency exchanges and can likely handle a relatively small loss like this, but it is setting up the SAFU fund to cover future losses. Now, 10% of trading fees will be set aside to fund the SAFU, and this will be stored in a cold wallet.

Additionally, Binance will be giving the API users that encountered problems zero-fee trading until 14 July 2018. All other users will be given a 70% rebate on trading fees during the same period, paid with BNB, Binance’s native cryptocurrency.

The Binance team stated: “Binance has achieved explosive growth in the first year. With this growth, we also experience many problems. We must reflect upon these problems, learn from them, and improve ourselves. We know in the course of making history, we will be tested again and again. We believe every test makes us stronger. And only if we fight together, can we move the industry forward.”

 

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