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Cryptocurrency trading platform Cypher has released a plan to recover from a $1 million attack and stated that it will “socialize” the losses across the platform in the initial phase of the recovery process. In the first phase of the plan, the Solana-based trading platform will generate a “proportional redemption package” from its existing assets, making these assets withdrawable by users through a web interface.
Profit Distribution to Users
As the platform currently does not have enough funds to reimburse all deposit holders, the losses will be distributed to all accounts in this initial phase, rather than being covered by a specific individual or group. In the second phase of the recovery process, the protocol will raise funds through the initial DEX offering (IDO), which will be used for audits and further development.
At the same time as the IDO, users will also receive a “debt token” representing the remaining assets they owe to the protocol. This debt token will entitle users to receive future USD Coin profits generated by Cypher and allow for the eventual reimbursement of losses incurred by the protocol due to exploitation.
Priority to Prevent Financial Losses
The team stated, “Our top priority is to redirect funds to affected users and emphasize our commitment to rectify their financial losses.” After these funds are reimbursed, the team will engage auditors OtterSec and Mad Shield to conduct public audits on Cypher’s patched version to identify any other vulnerabilities before they become a problem.
The protocol plans to proceed only after “addressing each potential security vulnerability through meticulous evaluation.” During this time, the application’s smart contracts will remain frozen.
The $1 million Cypher attack occurred on August 8th. Security researchers have not yet determined the cause. Approximately $600,000 worth of cryptocurrencies emptied in the attack were frozen by various centralized exchanges, preventing the attacker from converting them into cash. Cypher has announced that it will attempt to recover these funds for users through collaboration with exchanges or seizure orders issued by law enforcement agencies.
