Cryptocurrency exchanges are getting better at recognizing “questionable activity” on their trading platforms. While there still is room for improvement, things are getting better every day. The Binance exchange halted trading and withdrawals on Tuesday after an alert was triggered for suspicious activity surrounding trades of Syscoin’s SYS token, giving the exchange—and Syscoin—time to figure out was going on and to correct the situation before it got out of control. After only a few short hours, trading was resumed and everything is now back to normal.
The alert came as Binance saw an odd spike in SYS trading coming from “a number of application programming interfaces (API).” Syscoin also noted the activity, saying in a tweet, “We are investigating a possible issue on the Syscoin blockchain, nothing is confirmed but we have asked for exchanges to halt trading while we investigate.”
As a precaution we had requested exchanges halt $SYS deposit/withdrawal today after we observed odd trading behavior coupled with atypical blockchain activity. After investigating the #Syscoin blockchain is safe. We are asking exchanges to reopen. Detailed wiki post tomorrow. pic.twitter.com/NEypr531zi
— Syscoin (@syscoin) July 4, 2018
The issue was later confirmed by Syscoin as a hack. The developers were able to correct the issue, and gave 10,000 Ether and 500 BTC to the Syscoin community as compensation. The amount of crypto given amounts to a little more than $8.1 million.
Syscoin also said that a subsequent investigation into the “odd trading behavior” determined that the SYS blockchain was safe, and asked exchanged to relaunch trading in the digital currency.
Through the hack, Binance trading of SYS rose to cover 87% of the volume of all SYS trading on the market. The price of one SYS on the exchange reached as high as 96 BTC, or approximately $640,000.
In reinitiating trading, Binance removed all API keys and requested that all API users recreate their keys. It also rolled back the questionable trades and provided compensation to users. Any user affected by the SYS price increases is now authorized for zero-free trading from today through July 14, and all users on the exchange will receive a rebate of 70% on trading fees during the same timeframe. Those compensations will be paid through Binance’s own token, the Binance Coin (BNB).
The activity also resulted in the creation of a ‘Secure Asset Fund for Users’ (SAFU) at the exchange. As of July 14, Binance will destine 10% of all trading fees to the SAFU, which will serve as a fund “to offer protection to users and their funds in extreme cases.” Binance indicated that all SAFU funds will be maintained in a separate cold-storage wallet.
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