Binance Will Recompense $10 Million of its COVER Holders’ Losses
Cover Protocol still on target to release V2 in 1Q21. The team is working on new tokens and distributing returned 4,441.8 ETH to affected users.
The leading spot cryptocurrency exchange, Binance, will be compensating just over $10.1 million to affected COVER users.
Binance will be using its SAFU fund to distribute the funds in 8,171,634.10 BUSD and 2,581.16 ETH, shared the exchange CEO, Changpeng Zhao. He said,
“COVER smart contract got hacked. A lot of users lost A LOT of money. The project team says they can’t cover the losses. We made a simple decision, we use our funds to cover the losses of our users. $10 million bucks.”
As we reported, the insurance coverage DeFi project, COVER was exploited earlier this week with an infinite minting bug in their incentives contract resulting in 40 quadrillion COVER tokens to be minted. The attacker, Grap.Finance sold $3 million worth of COVER tokens for ETH and returned the funds to Cover and burned all the tokens minted.
Cover Protocol then announced that they will be providing a new COVER token through a snapshot. They are also “still on target to release V2 (Q1 of 2021) for Cover Protocol.”
As per its compensation plan, a snapshot taken some point before block #11541219, will be used to distribute new tokens and the returned 4,441.8 ETH will be distributed to the users affected.
But of course, this doesn’t cover all the losses, so Binance has stepped in to help its users who bought COVER from the exchange after COVER’s proposed snapshot time at 2020/12/28 8:11:06 AM (UTC) and thus become worthless. The exchange further noted,
“A large number of minted COVER tokens (greater than the COVER circulating supply) were bought by arbitrageurs on decentralized exchanges and deposited on Binance, causing the price of COVER to decrease at an alarming rate, and resulted in many Binance users experiencing significant losses.”
Some see this as Binance’s marketing tactic, a win-win situation, others are appreciating the gesture noting, “There was really no reason for them to do this.”