On April 1, a scandal at the cryptocurrency exchange Binance caused significant turmoil in the market. Low-cap altcoins experienced severe losses, creating panic among traders.
Sharp Decline of Altcoins on Binance
The crash of ACT by over 63% also affected other altcoins on Binance, such as DEXE, KAVA, HIPPO, TST, LUMIA, and QUICK, which saw declines over 50% within 24 hours. Major liquidations occurred after sudden leverage ratio adjustments for affected altcoins. Wintermute's CEO, Evgeny Gaevoy, noted that the incident arose due to an arbitrage opportunity in an AMM pool.
Binance's Response to the Crisis
In response to the turmoil, Binance released a statement indicating that large user transactions significantly influenced the sharp declines in altcoin values. Preliminary data revealed three VIP users selling approximately $514,000 of ACT on the spot market. Binance emphasized it cannot intervene in user selling behavior and is continuing its investigation.
Market Future After the Incident
The exchange continues to update leverage ratios based on market conditions. Binance stresses the importance of market makers and is developing programs to encourage their participation in a volatile market. Future steps will focus on stabilization and prevention of similar incidents.
The Binance scandal highlighted the vulnerability of the cryptocurrency market to abrupt changes and the need for implementing additional safety measures to prevent similar incidents in the future.
