The Aftermath Of Syscoin (SYS) Mega Pump And Binance API Attack
Syscoin trading experienced a series of irregular activities starting on June 3 at around 20:18:00 UTC.
We followed the entire situation as it unraveled, you can read about here. we even have a screenshot of the famous mega order!
These events ended with an astonishing trade where 11 SYS coins were exchanged at a cost of 96 BTC (approximately $635,000); at a time when a single SYS coin should have sold at prices close to $0.20.
In the ensuing confusion and chaos, a lot of misinformation occurred. It included the allegations that the SYS blockchain had been compromised and that free coins had been mined.
The immediate reaction from the Syscoin team and trading exchanges were to suspend trading activities.
As it turned out, all action with regard to prices was at Binance.
Syscoin (SYS) blockchain was not hacked
Investigations by the Syscoin team revealed that the network has not been hacked. What happened was that a number of anomalies set in motion a series of erratic blockchain behavior.
It happened that an upgrade from 3.0.5 Qt wallet to the 3.0.6 version wasn’t carried out by all nodes. Those that didn’t end up freezing. Miners who had upgraded ended up setting mining fees at 0.001 SYS/kb.
This according to the team was, “an order of magnitude higher than the default. As a result, transactions seemed to not be processed and some equated it to an attack during the same time as a large price fluctuation.”
There was also abnormal mining of unusually large blocks that contained suspiciously large output transactions of 46 million Syscoin. The same transactions had been chained as unconfirmed.
The team alerted exchanges, including Binance, Bittrex, and Poloniex.
Binance Sets up Asset Recovery Fund
It has since emerged that much of the “pump and dump” confusion was a result of a compromise on the trading platform Binance.
According to the exchange, “irregular trades were detected from a number of API users, triggering our internal risk management system. As such, Binance made a timely decision to suspend trading, withdrawals, and other account functions”
As a measure to mitigate any such eventualities, Binance has said it’s going to set up a Secure Asset Fund for Users (SAFU).
Binance, through its CEO Changpeng Zhao, has said that plans to set up SAFU by July 14 are already underway.
The platform has indicated that it will set aside 10% of its total trading fees for the said fund.
Binance said in a statement that SAFU will “offer protection to our users and their funds in extreme cases. This fund will be stored in a separate cold wallet,”
Zhao has also reassured the investing community that everything is within the control and that there hasn’t been any hack at Binance.
This follows reports that about 7,000 BTC was withdrawn from Binance at the time of the apparent irregular trading activities.
There’s no correlation between these allegations and the API keys compromise. As that unfolds, however, users will likely be buoyed by the creation of SAFU.
Trading has resumed after Binance asked all users to generate new API keys.
Syscoin (SYS) topped the list of the day’s biggest gainers on July 4, after its prices skyrocketed by over about 90 percent to trade at $0.492.
The price jump had seen its value rise from just over$0.25 against the US dollar. Its daily trading volume also rose exponentially to hit $268 million.
However, SYS now trends as one of the top losers after its price took a hit following manipulation of Binance API keys.
That drop began immediately and has seen SYS value drop by a further 22 percent in the last 24 hours. SYS/USD is trading at about $0.1968 (at the time of writing)and looks set to drop even further.
The coin’s intraday trading volume has also dropped sharply to currently sit at about $18 million. The effect of the abnormal trading activities has yet to dissipate and the coin will most probably correct lower, bearing in mind weak market sentiment.