Binance, one of the largest cryptocurrency exchanges, announced its decision to compensate for the losses incurred by Cover protocol users. The company will pay $ 10 million from the SAFU fund to eligible Binance users affected.
The team announced that they have reviewed the compensation plan offered by the Cover protocol and realized that after the suggested snapshot time of COVER (December 28, 8:11:06 UTC), many Binance users who purchased COVER on the trading platform will have their tokens.
to recompense a total of $10,107,505 USD (distributed in 8,171,634.10 BUSD and 2,581.16 ETH) to affected and eligible users.
Short thread… https://t.co/gBc9Z4KC6d
— CZ Binance (@cz_binance) December 31, 2020
$ 10 million compensation
Thus, the company planned to distribute $ 10 million from the SAFU fund to protect its users from losses.
Specifically, the compensation arises only from those who hold or trade COVER tokens within the specified time frame.
Binance has stated that it will not pay any additional compensation only for users who deposit tokens between ETH Snapshot Time and Trading Stop Time.
What happened to COVER?
On December 28, a hacker exploited a vulnerability in the Cover protocol to issue an unlimited number of COVER tokens. While the protocol itself is secure, the COVER price dropped by 80% as the attacker inflated the total amount of tokens in circulation by about 12 quintillion.
Since then, the project team has developed a compensation scheme to cover losses incurred by protocol users. However, the proposed scheme only covered decentralized exchanges such as Balancer, SushiSwap, Uniswap, among others.