Earlier today, Binance’s futures platform suffered a flash crash of nearly 3 percent in a matter of just seconds.
Initially, Binance CEO Changpeng Zhou (CZ) took to Twitter to announce that the flash crash had comprised a deliberate attack executed by a market maker known to the exchange.
A market maker from a smaller futures exchange tried to attack @binance futures platform. NO ONE was liquidated, as we use the index price (not futures prices) for liquidations (our innovation). Only the attacker lost a bunch of money, and that was that. pic.twitter.com/ztMZEtYKc6
— CZ Binance (@cz_binance) September 16, 2019
CZ stated that the market maker had opened their own futures exchange during recent months, describing the incident as the second instance in which the actor sought to attack the platform.
CZ Retracts Accusations of Deliberate Attack
Nearly two hours later, CZ updated his post announcing that Binance had been in contact with the market maker and determined that the flash crash had been accidentally caused by an algorithmic parameter error.
Had a chat with the client. It was an accident, due to a bad parameter on their side. Not intentional. All good now.
— CZ Binance (@cz_binance) September 16, 2019
No liquidations occurred on Binance’s futures platform as a consequence of the sudden price drop, owing to Binance processing liquidations according to an index price.
The ordeal has garnered significant criticism on crypto-Twitter, with numerous posts criticizing CZ’s decision to publicly accuse the market maker of attacking the exchange prior to discussing the matter with them.
usually one “has a chat” with the client FIRST, before calling them out publicly right? 🤷♀️
— 🍄🌲BenjaminBlunts🌲🍄 (@SmartContracter) September 16, 2019
Other posts expressed skepticism regarding the whole ordeal, highlighting the apparent contradiction between dismissing today’s events as having been caused by a “bad parameter” after accusing the actor attempting to attack the exchange for a second time.
Second time ? Accidentally??🤔👀
— Bitcoin (@_btc1) September 16, 2019
ETH Flash Crash Tanked Prices 99.97% in 2017
The cryptocurrency markets are no stranger to flash crashes, with many sudden and extreme red candlesticks littered throughout the historic charts of numerous exchanges.
On June 21, 2017, the price of Ethereum (ETH) on GDAX (now Coinbase Pro) suddenly plummeted 99.97% from roughly $318 to $0.10 in seconds. The crash was attributed to a single “multi-million dollar market sell” order which filled orders from $317.81 to $224.48, in turn triggering roughly 800 stop-loss orders and margin calls that drove prices down to $0.10. GDAX refunded all users who experienced stop order execution of margin calls during the crash, restoring said users’ ETH-USD balances to what they were immediately before the incident.
BSV Suffers Recent Flash Crash on Bitfinex
On May 30, the sudden dumping of 25,000 Bitcoin SV (BSV) drove prices from $254 to $44 in a matter of minutes on Bitfinex before immediately rebounding to stabilize at roughly $220.
At the start of December 2017, Bitfinex’s Neo (NEO), OmiseGo (OMG), and Metaverse (ETP) markets all suffered sudden flash crashes of over 90%, reportedly driven by cascading liquidations.
Last modified (UTC): September 16, 2019 6:49 PM
