Binance to Reimburse $10 Million for Exploited Users From Cover Protocol
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Binance to Reimburse $10 Million for Exploited Users From Cover Protocol

December 31, 2020      Jafrin Ahmed

Cryptocurrency exchange Binance has issued a compensation plan for users that were affected by the Cover protocol attack. The exchange will apparently spend $10 million for the eligible users from its SAFU funds. The distribution will be made in 8,171,634.10 BUSD and 2,581.16 ETH. On Dec. 28, a hacker attacked the Cover protocol to mint an unlimited number of COVER tokens. Even though the protocol itself is safe, the price of the COVER token has since crashed by almost 80% since the hack. The reason for the crash comes amid the attacker inflating the total amount of tokens in circulation by about 12 quintillions.

Binance to Compensate $10M for Affected Users From Cover Protocol

In its announcement, Binance explained that they studied the compensation plan offered by Cover protocol. The team concluded that a number of its users who bought the COVER tokens on their platform after COVER’s proposed snapshot time (December 28, at 8:11:06 AM UTC) would have their tokens become worthless.

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Hence, the exchange decided to distribute $10 million from its SAFU fund to protect its customers’ funds from losses.

Since the attack, the Cover protocol team has also developed a compensation plan to cover the losses incurred by the protocol users. However, the proposed scheme covered only decentralized exchanges, such as Balancer, SushiSwap, Uniswap, among others.

Compensation Eligible Under Specific Conditions

Regarding the compensation plan of COVER, the team will take a snapshot of all COVER balances at an Ethereum block height of 11541218 on Dec. 28, 8:11 AM (UTC) (ETH Snapshot Time). It will then distribute the new COVER token at a ratio of 1 COVER-old = 1 COVER-new.

Binance further highlighted that it will incorporate the time that COVER trading was halted on Binance on Dec. 28 at 12:40 PM (UTC) (Trading Stop Time).

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Hence, the compensation will be eligible only for those who held or traded the COVER tokens during the specified timeframe. Binance will not make any additional compensation for users that only deposited tokens between the ETH Snapshot Time and the Trading Stop Time.

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Jafrin Ahmed
Jafrin Ahmed

Jafrin is a cryptocurrency journalist/researcher fascinated by the world of decentralization. She is hopeful towards blockchain’s innovation and its potential to reshape the world for good. Currently, she is bringing out the best of cryptosphere via covering the latest ins and outs of the blockchain space.