Binance to reimburse $10 million to affected users over COVER incident

• Binance issued a compensation plan for COVER users.
• The cryptocurrency exchange will spend $10 million from SAFU fund.

Binance, one of the largest cryptocurrency exchanges, announced the decision to compensate the losses incurred by users of the Cover protocol. The company will pay $10 million to affected eligible Binance users from its SAFU fund.

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

Thus, the company came up with a plan to distribute $10 million from the SAFU fund to protect its users from losses.

Notably, the compensation is due only to those who held or traded 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.

What happened to COVER

On December 28, a hacker used a bug in the Cover protocol to mint an unlimited number of COVER tokens. Even though the protocol itself is safe, the COVER price crashed by 80% since the exploit as the attacker inflated the total amount of tokens in circulation by about 12 quintillions. 

Since that time, the project team developed a compensation plan to cover the losses incurred by the protocol users. However, the proposed scheme covered only decentralized exchanges, like Balancer, SushiSwap, Uniswap, among others. 

Meanwhile, centralized exchanges are supposed to reward their users by themselves.