On July 3, Binance noticed irregular trading activity of Syscoin (SYS) – trading bot activity spiked and 1 SYS (~$0.22 USD at the time) sold for 96 BTC (~$600K USD). Immediately afterward, Syscoin notified exchanges to halt trading while it performed an investigation.
After the abnormal trading activity was spotted, Binance announced it would undergo system maintenance, suspending trading and withdrawals.
Massive SYS Rally
As most traders were unaware of what happened, the buy order led to a price rally for SYS.
A Twitter user shared an animation of what took place on the SYS 1-minute chart on Binance:
— CryptoTutor⚡️ (@CryptoTutor) July 3, 2018
So, what exactly happened?
Twelve hours after suspending trades, Binance issued an incident recap, stating:
At 2018/07/03 20:18:00 (UTC), irregular trades were detected from a number of API users, triggering our internal risk management system. As such, Binance made a timely decision to suspend trading, withdrawals and other account functions.
As a result, Binance took the following actions:
- Resetting all API keys
- Rollback of the 96 BTC / 1 SYS trade
- For the users who were negatively affected by choosing to trade the rising SYS price, Binance will offer zero-fee trading between 2018/07/05 – 2018/07/14.
- For all other Binance users, Binance will offer a 70% rebate on the trading fees received from you (does not include referrals) between 2018/07/05 – 2018/07/14. The rebate will be given in the form of BNB calculated using the closing price on 2018/07/14.
- For the users who were negatively affected by choosing to trade the rising SYS price, Binance is offering zero-fee trading between 2018/07/05 – 2018/07/14. If someone traded SYS during the incident and believes they were negatively affected, they are encouraged to open a support ticket.
Secure Asset Fund for Users (SAFU)
In addition to the incident report, Binance announced the creation of the Secure Asset Funds for Users (SAFU) – a cold wallet to be used for user compensation in extreme cases. The wallet will collect 10% of all trading fees and be used to protect users from worst-case scenarios such as an exchange glitch or hack.
The “SAFU “acronym became a meme in May 2018 when a YouTube user uploaded this video of a dystopian crypto future:
Always the good sport and savvy businessman, CEO Changpeng Zhao demonstrated his on-point sense of humor by tweeting:
— CZ (@cz_binance) July 4, 2018
Cover Photo by Matthew Brodeur on Unsplash