Binance To Compensate Cover Hack Victims With $10 Million SAFU Fund

News / 31.12.2020

Leading cryptocurrency exchange, Binance has announced a compensation plan for the COVER hack victims on its platform. This is a remarkable gesture from the exchange towards its customers that lost their tokens in the hack.

$10 million to be distributed from Binance SAFU Fund

Binance revealed more about the compensation plan in an extensive blog post on its website. According to the exchange, the decision to compensate affected customers was taken after a COVER team meeting.

The embattled Defi platform informed Binance that it could not generate enough funds to recompense all affected Binance users. Following further analysis, the exchange realized that many of its users who bought COVER before the hack attack would have their tokens worthless.

Binance decided to utilize its SAFU Fund funds to recompense a total of $10,107,5050 to affected users. The funds will be distributed in 8,171,634 BUSD and 2,581 ETH, respectively.

Binance also revealed that two sets of users would be eligible for the recompensation fund. The first sets are users that had COVER in their account before the ETH snapshot time. These users will be new cover tokens at a 1:1 ratio of their previous balance at the snapshot time.

While those who bought COVER after the snapshot would be eligible to receive compensations, Binance will also compensate users who originally purchased COVER tokens in either ETH or BUSD.

COVER Struggling To Recover After Hack Attack

Cover suffered a major attack on its protocol last week, which led to a downturn in its price. The hacker manipulated its staking protocol, inflating the token supply by printing over 40 quintillion coins.

Surprisingly the attacker returned the funds telling the p2p coverage market to take care of its house. Nevertheless, it was later discovered that the attacker had earlier liquated over 11,700 coins. In total, the attacker was able to steal more than $5 million from the project within the hacking period. The attack led to a massive dump in COVER price, falling more than 97% in the space of hours.

Since then, COVER has sought to recover, with the firm recently publishing a compensation plan. Affected users will be eligible to receive new COVER tokens on a 1:1 ratio with their initial balance before the hack. It remains to be seen whether the DeFi protocol will undergo a full recovery in the coming weeks.

Olowoporoku Adeniyi is a blockchain enthusiast and crypto evangelist. Currently he loves all things crypto and covers happenings within the blockchain space.