A recent scandal involving the cryptocurrency exchange Binance has sent shockwaves through the market, causing dramatic price drops for numerous altcoins. On April 1, a significant incident led to the value of the coin Act I The AI Prophecy (ACT) plunging over 63% in a single day, falling to just $0.06987. This sharp decline triggered widespread panic among traders, resulting in massive liquidations across various altcoins listed on the platform and elevating the hashtag #BinanceBoykot to trending status on social media.
How Did ACT and Other Altcoins Fare?
The drastic fall of ACT did not occur in isolation; other altcoins such as DEXE, KAVA, HIPPO, TST, LUMIA, and QUICK also witnessed declines exceeding 50% within 24 hours. An analysis of on-chain data revealed that Binance had decided to reduce leverage ratios on the impacted altcoins abruptly, which resulted in automatic liquidations for major players like market maker Wintermute.
What Steps is Binance Taking to Address the Fallout?
In response to the turmoil, Binance issued a statement asserting that substantial user transactions were primarily responsible for the drastic price drops. Preliminary investigations noted that three prominent users sold around $514,000 worth of ACT on the Binance market, while a non-VIP user executed a transfer valued at approximately $540,000. These trades catalyzed automatic liquidations in ACT futures, creating a ripple effect that adversely affected other low market-cap coins.
Binance insisted that the total supply of ACT remains in circulation, indicating their inability to intervene in user selling activities. The exchange is currently conducting a comprehensive investigation into the incident and noted that they regularly adjust leverage ratios based on market conditions. Binance emphasized the importance of market makers and is actively working on initiatives to promote increased participation from them.
- ACT experienced a 63% decline in value, sparking widespread liquidations.
- Other altcoins listed on Binance also fell sharply, with some exceeding a 50% drop.
- Three VIP users sold large amounts of ACT, triggering automatic liquidations.
- Binance is conducting an investigation while maintaining that market conditions dictate leverage adjustments.
As the dust settles from this incident, the cryptocurrency community remains on high alert, watching how Binance will navigate the repercussions and support its users amidst the ongoing investigation. The incident underscores the volatility inherent in the cryptocurrency market, reminding participants of the risks associated with trading on major exchanges.
