Cryptocurrency exchange Binance has refunded users USD 1 million (USDT) ($1 million) for its handling of the CyberConnect (CYBER) token incident.
as describe On Sept. 7, the listed CYBER tokens saw price differences from the previous week due to a liquidity squeeze on South Korean cryptocurrency exchange Upbit’s CYBER cross-chain bridge. This caused arbitrageurs to borrow CYBER from Binance to profit from the difference. In turn, Binance users who have staked CYBER in the Flexible Yield Program are also prohibited from redemption because the staked assets have been borrowed and the loan limit has been reached. The exchange stated:
“In addition to Proof-of-Stake (PoS)-based products, a large portion of cryptocurrency flexible financial products generate income by lending subscribed assets to other users through margin or collateralized loans. In extreme cases, borrowers may not be able to repay the loan in time, or There may be some delay in the redemption of subscribed assets. August 31, 2023 is the case.”
Going forward, Binance said it will take action to increase interest rates on collateralized assets to discourage lending during periods of high token volatility.
As a remedial measure, the exchange provided 800,000 USDT to 887 affected users who were unable to redeem CYBER products during the incident, as well as an accrued staking reward of 871 CYBER. Additionally, 200,000 USDT worth of vouchers sponsored by the CyberConnect Foundation will be distributed to all users who stake CYBER via Binance Flexible Yield during the event, regardless of whether they choose to redeem tokens. The company also wrote:
“Binance reserves the right, at its sole discretion, to modify or cancel this announcement at any time and for any reason without prior notice.”
Related: Binance Creates Smart Contract to Refund Users Affected by $3M Rug Pull
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