Syscoin and Binance: All Your Funds are SAFU

A single Syscoin changed hands for 96 BTC ($600,000) at one point, as attackers sold coins at vastly inflated prices through hacked exchange accounts.

It’s still not clear exactly what happened to Syscoin, but the results were plain to see on Binance’s charts and orderbooks. Initially it seemed possible that the Syscoin blockchain was the victim of yet another 51% attack, following GameCredits, Bitcoin Gold, and others. This was denied by the Syscoin team, who released this statement: https://github.com/syscoin/syscoin/wiki/Debrief-on-Recent-Syscoin-Trading%C2%A0Activity. The TL;DR is that ‘everything is normal and the blockchain is working as expected’. There were some irregularities on the blockchain that pointed to serious problems and caused substantial concern given the trading anomalies, but these appeared to have more to do with a software upgrade than an attack. Whether the timing was planned or coincidence is yet to be established.

Either way, a significant amount of SYS were deposited to Binance through a series of hacked accounts. These accounts had enabled API access, in many cases presumably to allow bot trading. A little later than the other exchanges that were warned of the suspicious activity, Binance halted trading and shut down all APIs, forcing users to create new ones and emphasising they should only do so if there was a genuine need for API access. By then, funds left on the hacked accounts had been used to buy SYS up to a high of 96 BTC per coin. In total, the hackers were able to withdraw 7,000 BTC from Binance.

Binance has rolled back the irregular trades. It has also offered zero-fee trading for all users who traded SYS during the meteoric rise. (There was no additional charge for the lesson that greed will get you burned.) All Binance users have been offered a rebate on trading fees for the inconvenience. You can find out more at https://support.binance.com/hc/en-us/articles/360006675312.

Lastly, Binance has established a Secure Asset Fund for Users, or SAFU. 10% of the trading fees they collect will be placed in the SAFU to compensate users in the event of future issues. This is not just an insurance policy but a reference to a humorous video that did the rounds a few months ago, when one Binance user posted their take on a 2001-inspired dystopian future ruled by the exchange:

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