Binance to compensate users with $1 million after CYBER incident

The cryptocurrency exchange Binance promised to distribute $1 million among those affected by the recent outage involving the withdrawal of the CyberConnect (CYBER) token from the Earn service.

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According to a statement from the platform, on August 29 there was a price divergence in CYBER due to a liquidity crunch in cross-chain protocols of the South Korean exchange Upbit.

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This led arbitrageurs to borrow CYBER from Binance to profit from the price discrepancy. As a result, Earn users were unable to withdraw tokens from the platform because the lending cap had been reached.

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“Beyond Proof-of-Stake-based products, the majority of flexible crypto products generate returns by lending the underlying assets to other users via margin or secured loans. In extreme conditions, borrowers may be unable to repay their debts on time,” Binance explained.

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To prevent a recurrence of the incident, the platform will tighten interest rates on blocked assets to curb lending during periods of high volatility.

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As compensation, the exchange offered $800,000 to 887 users who could not withdraw their tokens. It will also distribute 871 CYBER as accrued rewards.

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Earlier, Binance released a monthly report confirming reserves. Its balances hold 618,126 BTC (~$15.9 billion) to back client deposits of 588,171 BTC (~$15.1 billion).

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Earlier, the trading platform said it would discontinue support for its own stablecoin BUSD in 2024.