In catching the wind of an interesting turn of events, Binance, a popular crypto exchange, has opted to refund its users with a million Tether ($1 million) following an incident involving the CyberConnect (CYBER) token. The event took place on Sept. 7, when a liquidity crunch caused a price discrepancy in CYBER tokens on Upbit, a Korean crypto exchange.
With the aim of leveraging this price differential, opportunistic traders borrowed CYBER tokens from Binance, which unfortunately left its users who had staked CYBER through its Flexible Earn Program unable to redeem their assets, as the staked assets in question had been borrowed out completely.
To rectify the situation, Binance plans to compensate 887 affected users with 800,000 USDT who couldn’t claim their CYBER holdings during the incident, accompanied by an extra 871 CYBER in staking rewards. Furthermore, 200,000 USDT worth of vouchers, sponsored by the CyberConnect Foundation, will also be distributed to all users who staked CYBER via Binance Flexible Earn at the time of the event, regardless of whether they activated their token redemption option or not.
In light of these events, Binance has also mentioned plans to hike interest rates on staked assets during high-volatility periods as a method to discourage borrowing. But, is this a perfect approach? Perhaps a more efficient vetting service to stave off opportunistic borrowers would serve a better purpose, or even a system to prioritise loyal stake-holders over new borrowers could ensure fairness.
Meanwhile, another complicated case for Binance has arisen related to a $11 million rug pull caused by delayed decisions to freeze the BNB wallets. The scam was executed on PopcornSwap, a decentralized exchange on the BNB Chain, where over $2 million of liquidity providers’ assets got stolen under the guise of a “preUpgrade” function contained in the exchange’s smart contract. As a result, victims pinned hopes on Binance to freeze the scammers’ address.
Interestingly, after a considerable deliberation, an investigation revealed that Binance was, indeed, able to lock private wallet addresses on BNB Chain, provided all validators were in unanimous agreement. Finally, the fraudulent funds remained frozen in the attacker’s account almost two years after the scam, thanks to Binance’s intervention.
But, were the victims satisfied? Not fully, it seems. They argued Binance could have mitigated the incident much earlier, showing that even when funds are secured or returned, the response’s timing can still leave a bitter taste in those affected.
Isn’t it time, perhaps, crypto exchanges work on improving their safeguards and make their decision-making process more prompt in order to maintain their users’ trust and security? Only time and actions taken will tell.
Source: Cointelegraph
