September 7, 2023 at 16:09 GMTModified date: September 7, 2023 at 16:10 GMT
September 7, 2023 at 16:09 GMT

Binance to reimburse users $1m for Cyber Earn failure

Binance has said today that it will refund users one million Tether following its handling of the recent CyberConnect token incident.

Binance. Source: Shutterstock

Binance has revealed today that it will refund users one million Tether following its handling of the recent CyberConnect (CYBER) token mishap.

Last month, users were prevented from withdrawing CYBER Earn assets due to a cross-chain bridging issue.

In a note today, the exchange posted: “We are aware of user feedback surrounding the redemption of CYBER Simple Earn Flexible Products, and we apologize for the situation. Binance has been taking this very seriously and working proactively to address users’ concerns, in line with its user-first mentality and the principle to hold up the highest standards of transparency with the community.”

Explaining what happened, Binance added: “On 2023-08-31, there was a big price discrepancy of CYBER between Upbit and other exchanges. This can be attributed to Upbit only supporting CYBER (ERC20), and that a cross-chain bridge for CYBER (ERC20) and CYBER (BEP20) was not available at that time. This resulted in a liquidity crunch on CYBER (ERC20) on Binance and other exchanges. 

“With the price of CYBER soaring, arbitrage users started to borrow CYBER for their trading strategies. This led to a surge of loan requests for CYBER that triggered the risk management protocol on Binance, where new loan requests were halted and loan interest rates were increased by a large extent.

“As Crypto Loans and Margin products on Binance grant loans based on actual subscribed assets on Simple Earn, the exceedingly large volume of redemption requests could not be fulfilled immediately despite maintaining a maximum borrowing limit as buffer for redemptions. 

“Other than Proof-of-Stake (PoS) based products, a large part of crypto flexible financial products generate income by lending out subscribed assets to other users via Margin or collateralized loans. Under extreme conditions, borrowers may not be able to repay their loans in time, or the redemptions of subscribed assets may experience some delays.

“This was the case on 2023-08-31, which arose due to the simultaneous surge in demand to borrow CYBER and redemption requests. CYBER Simple Earn Flexible Products redemptions could not be executed immediately as it would under normal circumstances.”

Moving forward, Binance adds: “The crypto industry is still at its infancy stage with much room for improvement. Your feedback and suggestions are highly valued as we continue to build the industry together.”