- Hacked crypto exchange Cypher Protocol has revealed plans to reimburse users two weeks after losing over $1 million in an exploit
- The plans include distributing losses to all user accounts and issuing a new token
- Cypher however plans to resume operations after a thorough security evaluation
Two weeks after suffering a crippling hack where it lost over $1 million, Cypher Protocol has announced plans to reimburse users. The plans include distributing the losses across all user accounts and issuing a new token that will represent owed funds. Cypher Protocol’s smart contract remains frozen with the platform maintaining that it’ll resume operations after a thorough security evaluation, something that has proved almost impossible with more and more blockchain-focused platforms continuing to suffer security breaches.
Restoration is First Priority
In a Twitter thread, the platform revealed that it’ll audit its smart contract using external firms Ottersec and Madshield and boost its insurance fund, efforts that it hopes will revive the platform. It added that its approach will revolve around restoration, reinforcement and resilience.
If cypher wins, the community wins.
Next Steps:
1. Perform audits with Ottersec and MadShield
2. Reinforce the insurance fund
3. Drive success back to cypher and its usersWe’re not going anywhere.
— cypher ©️ (@cypher_protocol) August 23, 2023
The restoration aspect will include sharing the losses amongst all user accounts after curating a “pro rata redemption package” of its available assets and allowing affected users to withdraw the package.
Cypher will then move to the reinforcement stage where it’ll conduct an initial decentralized exchange offering (IDO) to raise funds for use in paying auditors and other activities meant to strengthen the platform. The IDO will run concurrently with the issuance of a new token intended to represent the amount of funds Cypher owes its users.
Exchange to Share Profits with Users
The token’s holders will share in the protocol’s USDC profits until the users’ debt is paid in full. Cypher further plans to use the funds from the IDO “to send a clear message: Cypher is here to stay.”
Cypher’s plan to reimburse users comes a week after DeFi platform Curve Finance promised to return stolen funds to users, although it has already recovered 79% of the $62 million siphoned from the platform.
Although Cypher has outlined a detailed reimbursement and recovery plan, its actualization may take time.
