Binance Will Cover $10 Million COVER Losses

Binance has decided to compensate users who lost money on their investment during the attack on the DeFi project COVER Protocol.

Short Attack

Cover Protocol, a DeFi project, was attacked on December 28. Hackers managed to freely create project native COVER tokens and exchange those tokens for ETH, DAI and WBTC.

Attackers can steal around $4 million worth of cryptocurrency this way. Funds have been returned by the “white hat” hacker responsible for the attack.

Although the incident has ended, it has hurt COVER’s market value, which fell from $10.77 to $4.66 in just a few hours. Binance was one of the exchanges that stopped trading in response to the attack, likely contributing to the token’s decline in value.

Binance Will Compensate Traders

Now, Binance has announced plans to give $10 million to users who hold the project’s COVER token on the exchange. It will distribute $10 million in Ethereum (ETH) and and Binance Coin (BUSD).

In an announcement, Binance expressed concern “that a large number of Binance users who purchase COVER on Binance… will have their tokens rendered worthless” as a result of the attack. Although Binance has no relationship with the COVER Protocol, it does list the project’s COVER token, meaning that it has good reason to keep COVER’s market value healthy.

Compensation will be taken from Binance’s SAFU fund. These funds were previously used to cover the May 2022 Binance attack, in which $40 million BTC was stolen.

While Binance’s compensation is generous, it doesn’t address Cover Protocol’s security flaws. The COVER protocol will release more information in the future when migrating to more secure systems.

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