Binance to reimburse $10 million to affected users over COVER incident

Binance issued a compensation plan for COVER users.
The cryptocurrency exchange will spend $10 million from SAFU fund.

Binance, one of the largest cryptocurrency exchanges, announced the decision to compensate the losses incurred by users of the Cover protocol. The company will pay $10 million to affected eligible Binance users from its SAFU fund.

#Binance will utilize the Binance
#SAFU Fund

to recompense a total of $10,107,505 USD (distributed in 8,171,634.10 BUSD and 2,581.16 ETH) to affected and eligible users.

Short thread... https://t.co/gBc9Z4KC6d
— CZ Binance (@cz_binance) December 31, 2020

The team explained that they studied the compensation plan offered by Cover protocol and realized that a lot of Binance users who bought COVER on the trading platform after COVER's proposed snapshot time (December 28, at 8:11:06 AM UTC) would have their tokens become worthless.

Thus, the company came up with a plan to distribute $10 million from the SAFU fund to protect its users from losses.

Notably, the compensation is due only to those who held or traded COVER tokens during the specified timeframe.

Binance will not make any additional compensation for users that only deposited tokens between the ETH Snapshot Time and the Trading Stop Time.

What happened to COVER

On December 28, a hacker used a bug in the Cover protocol to mint an unlimited number of COVER tokens. Even though the protocol itself is safe, the COVER price crashed by 80% since the exploit as the attacker inflated the total amount of tokens in circulation by about 12 quintillions.

Since that time, the project team developed a compensation plan to cover the losses incurred by the protocol users. However, the proposed scheme covered only decentralized exchanges, like Balancer, SushiSwap, Uniswap, among others.

Meanwhile, centralized exchanges are supposed to reward their users by themselves.

Share: Cryptos feed

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.