The Cyphar Incident occurred during the Imperial Era when a land dispute occurred on the planet Cyphar between the local Cyphari Afe clan and human colonists based on the Hollenside Enclave. The land dispute was rooted in two factors: first, the colonists' desire to harvest a pre-spice material used in the manufacture of scarn; and second, the insurgent leader Nightswan's plot to smuggle doonium out of Cyphar. Commander Thrawn used military force to end the human colonists' incursions into the Afe clan's territory and disrupt both the scarn and doonium smuggling operations. As a result, both Thrawn and Ensign Eli Vanto were promoted to higher ranks in the Imperial Navy.
The planet Cyphar was home to the indigenous Cyphari species and a group of human colonists based in the Hollenside Enclave. During the Imperial Era, the shadowy pirate and insurgent leader "Nightswan" waged an insurgency against the Galactic Empire. To raise funds, Nightswan was involved in smuggling doonium, tibanna, and even spice. Nightswan established contact with a group of human colonists, who enlisted his help in smuggling a pre-spice material that was used to make a spice known as scarn. While Nightswan was uncomfortable with smuggling spice, he had little choice since the colonists were armed.
To distract both the Cyphar authorities and the Afe clan, the smugglers instigated a land dispute between human colonists and the Afe clan around a new doonium vein beneath Afe territory. This dispute soon escalated into raids and retaliatory strikes in defense by the Afe clan. The colonists claimed that the Afes were raiding their border settlements and demanded concessions and a safety buffer zone that would take up nearly half the Afres' land and forced them to relocate to territories controlled by other Cyphari clans. The Afes claimed that they had lived on the land for centuries and that their attacks were punitive expeditions for trespassing and border raids from the humans.
To conceal the doonium, Nightswan instructed the smugglers to smuggle them inside shellfish shells, paralleling an earlier tactic he had used on an ocean world. After both the Afe clan and human colonists petitioned the Empire to intervene, Commander Thrawn of the Imperial light cruiser Thunder Wasp requested the mission with the assistance and support of Imperial Security Bureau Colonel Wullf Yularen, a long-time friend and ally.
After Thrawn arrived along with Ensign Eli Vanto, Thrawn met with Pord Benchel, the mayor of the colony, along with 9 other members to listen to their complaints. After the conference, Thrawn and Vanto headed to meet Chief Joko of the Afe clan. After hearing Joko's complaints and learning more about the dispute, Thrawn analyzed the land around him and noticed that the crops developed improperly as a result of heavy metal poisoning. Thrawn informed Joko to move his people from the area as he anticipated a strong human incursion. Thrawn and Vanto also noticed that the movement of the human colonists are moving further northward towards the larger Cyphari cities in order to provoke the Afe clan into attacking.
Thrawn and Vanto remained in the area inside the Afe clan meetinghouse to monitor the human colonists as they trespassed. After monitoring the colonists, the pair learned that the colonists were actually attempting to collect scarn. Thrawn called in Imperial reinforcements and instructed to use stun. After Thrawn and Vanto took up positions, they engaged the colonists just as Imperial forces were landing and after capturing most of the colonists, they learned from Clay Tanoo that no raid were made for the night, instead the conspirators were to move their supply to a safe location, and since the scarn was not a spice yet, it was not a crime.
Thrawn ordered his forces to protect Afe lands if a skirmish were to erupt, and ordered Lieutenant Gimm to map the vein of scarn under the land. After doing so, Thrawn ordered the Thunder Wasp to fire, destroying the scarn but also damaging Afe land. The next morning, Joko protested to Thrawn, and informed him that he planned to appeal his action to Coruscant. Due to Thrawn's actions, his superiors were furious. In the end however the majority of the colonists were not aware of the true motivations of their fellow humans.
Thrawn's resolution of the Cyphar land dispute ended the conflict between Clan Afe and the human colonists. In addition, it disrupted the colonists' scarn smuggling operation and Nightswan's illegal doonium operation on Cyphar. Thrawn and Vanto spent the next week hunting down smugglers in obscure systems. A week later, they were summoned back to Coruscant where they were promoted. Thrawn was promoted to Commodore while Vanto received his long overdue promotion and attained the rank of Lieutenant Commander. Thrawn and Vanto's career progression was due to the lobbying of the future Lothalian Governor Arihnda Pryce, an ally of Thrawn who had disrupted Nightswan's spy ring on Coruscant.