Binance Has Temporarily Suspended Cryptocurrency Trading

Here's an explanation for Binance's actions on Wednesday and how they intend to make things right with their users.

Will McCormick
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Over the past few weeks, Bithumb, the sixth largest exchange by volume, lost $30 million after being hacked and EOS was held under an Emergency Measure of Protection Order, and those events had a huge impact on the cryptocurrency market. In comparison, a lot of people lost their heads after CCN reported that Binance had temporarily suspended trading on Wednesday.

Luckily, it's been confirmed that all funds are safe and the world's largest crypto exchange has resumed trading activities, but some traders are still unclear about what happened today.  

Why Did Binance Temporarily Suspend Trading Activities? 

Late on Tuesday night, Syscoin, a distributed network based on a fork of the Bitcoin protocol made an announcement on Twitter that a potential issue was developing within its system and specifically asked other exchanges to suspend the trading of its SYS token. Over the course of the day, a lot of people were astonished to see an order for 1 Syscoin was worth 96 BTC in exchange.

The trade was highly unusual and caused a fair amount of panic because it could have resulted in some kind of a hack or a major platform glitch. It's not clear how many SYS tokens were exchanged at that usual price. After realizing what was happening, Binance suspended all the platform's trading services to "undergo system maintenance" and released the following statement about the issues at hand: 

“Due to irregular trading on some APIs, Binance will remove all existing API keys as a precautionary security measure. All API users are requested to recreate their API keys.”

What Are the Long-Term Effects After Wednesday's Events? 

Such an unprecedented move in the market has lead to a lot of speculation for analysts. For instance, some news outlets have speculated that it was actually a deliberate move to explore the possibility of the Syscoin protocol as a way to mint new coins. To put those rumors to test, Syscoin made it clear that their blockchain is safe and asking exchanges to reopen to them. In a statement Syscoin's team developer said the following: 

“We saw suspicious activity and to mitigate risk, asked exchanges to halt trading while we investigated. Bittrex and Poloniex took immediate action and Binance launched their own investigation. Our tweet was accurate but misinterpreted as a “hack” by media. There was no exploitation of the Syscoin blockchain. There was no minting of coins. The blockchain shows this. It was a series of events that coincided with extremely odd movements in Binance."

To compensate for today's events, Binance announced that it would be rolling back irregular trades. The exchange will provide zero fee trading on its platform between the 5th and 14th of July for all the users who were negatively impacted during today's activities. Also, the company will compensate all their users with a 70 percent rebate on trading fees through the 14th. In a statement, Binance said the following about today: 

“To protect the future interests of all users, Binance will create a Secure Asset Fund for Users (SAFU). Starting from 2018/07/14, we will allocate 10% of all trading fees received into SAFU to offer protection to our users and their funds in extreme cases. This fund will be stored in a separate cold wallet.”