Binance Develops Smart Contract to Compensate Victims of $3M Xirtam Rug Pull

• Binance froze a deposit of about 1,909 Ether by the XIRTAM team after a rug pull that affected over 1,750 victims.
• Binance noted that only participants of the official XIRTAM token sale, both private and public, will be compensated. 

Leading cryptocurrency exchange by daily average traded volume for Bitcoin among other top digital assets, Binance, has demonstrated its commitment to ensure a safe crypto adoption for mainstream investors by announcing a refund of stolen funds.

According to the crypto exchange, it froze about 1,909 Ethers that were believed to have been stolen from XIRTAM investors through a rug pull. As a result, Binance announced that more than 1,750 should be refunded their funds that were stolen in May this year.

The company noted that its security team is evaluating XIRTAM on-chain activities to identify the rug pull victims – including their net losses – in order to facilitate a refund of the frozen funds. However, the exchange highlighted that only the participants of the XIRTAM token sale – including public and private – will be eligible for a refund.

Meanwhile, Binance provided a guide in both English and Chinese for the XIRTAM victims to confirm their eligibility for a refund. Binance, however, highlighted that users must have submitted their application by August 02 in order to be eligible for the refund.

What it Means For Binance’s Refund of XIRTAM Stolen Funds

Since the implosion of FTX and its sister investment firm Alameda Research late last year which wiped out over $32 billion from the industry, Binance has faced significant regulatory hurdles, especially from the United States, the United Kingdom, and their allies. The refund of XIRTAM’s stolen funds to the respective users is expected to raise confidence in Binance and its products, especially following the recent BNB chain upgrade dubbed Hertz hard fork, which enabled compatibility with Ethereum DeFi projects.

From a different perspective, the refund of XIRTAM stolen funds by Binance is a clear message to investors that secondary sales are not in any way securities. Moreover, only the participants of the public and private sales that were recorded on the blockchain will be compensated.

“If you purchased XIRTAM on the secondary market, or through a third party, we cannot guarantee a refund for you at this time, as we are not in possession of the funds that you paid for the XIRTAM token sale,” Binance noted.

The same reasoning was highlighted during the recent summary judgment on the SEC vs. Ripple lawsuit on XRP sales. Notably, Judge Analisa Torres argued that the SEC failed to show how XRP sales on secondary exchanges constituted investment contracts by violating the Howey test.

Nonetheless, the ideology argues for political correctness but ensures a clear perception from mainstream investors of digital assets. Moreover, investors will perform more due diligence on crypto projects before investing through smart contracts that bind them with many rules.