Binance, one of the leading cryptocurrency exchanges, has decided to return $1 million USDT (Tether) to users after a recent incident related to the CyberConnect (Cyber) token.
The refund aims to compensate users affected by a price discrepancy on the listed Cyber Token due to a lack of liquidity on South Korean cryptocurrency exchange Upbit.
Binance Solves CyberConnect’s Problems
As reported by Binance, the incident occurred after a lack of liquidity on the cypher cross-chain bridge hampered trading on Upbit. This created a price disparity between Upbit and other exchanges, attracting intermediaries who took cyber-lending from Binance to profit from the price difference.
As a result, Binance users who staked cypher in its flexible earning program were unable to redeem their holdings as the staked tokens were borrowed, and the loan limit was reached.
In response to the situation, Binance acknowledged the user feedback and offered a sincere apology for the inconvenience caused. The exchange reaffirms its commitment to prioritizing the interests of users and maintaining a high degree of transparency within the community.
Binance provided a detailed account of the events surrounding the incident. It noted that the lack of liquidity on the CYBER (ERC20) token has led to an increase in loan requests for CYBER, triggering Binance’s risk management protocol.
The exchange had to freeze new loan requests and raise loan interest rates significantly. However, due to the substantial volume of redemption requests, Binance faced challenges in fulfilling them promptly despite maintaining a maximum borrowing limit as a buffer for redemptions.
Strict reviews and possible delisting
Going forward, Binance outlined measures to enhance the user experience and mitigate the same risks. These measures include dynamically adjusting loan interest rates and strengthening risk management protocols.
Per its September 7 announcement, Binance also committed to conducting a stricter review of coins with smaller market caps and potentially removing coins with less liquidity from certain programs. To compensate affected users, Binance announced a distribution plan for $1 million USDT refunds.
It added that the 887 affected users who failed to redeem their CyberSimple Earn Flexible Products positions within a specific time frame will receive a portion of USDT tokens from the refund pool and additional CyberTokens.
The distribution will be in proportion to the daily average position of the eligible users. All other users who hold Cyber Simple Earn Flexible Products positions during the mentioned period will receive an equal share of Cyber Locked Trial Fund Vouchers sponsored by CyberConnect Foundation.
As the cryptocurrency industry continues to evolve, incidents like this are a reminder of the importance of robust risk management measures and continuous improvements to protect user interests and maintain trust in the ecosystem.
Binance Coin (BNB) is currently trading at $215, in line with the current bearish trend in the market. It has seen a marginal decrease of 0.2% in the last 24 hours and 1.3% in seven days. These figures indicate a relatively stable performance of BNB amid market conditions.
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source: www.newsbtc.com
