A sudden market crash on Binance saw the value of alternative cryptocurrencies drop dramatically, with some losing nearly all their value. Centralized exchanges are being held responsible for a chain reaction of forced selling.
The crypto market experienced a chaotic morning with multiple altcoins on Binance suffering flash crashes, some exceeding 90%. This event, potentially triggered by automated liquidations of cross-margin collateral by major centralized exchanges (CEXs), sent shockwaves across the industry. Market data indicated unusually high volumes of automated liquidations, suggesting systemic margin clearing events were involved. Binance deployed $188 million from its shared insurance fund to cover losses and stabilize trading during the volatility. Co-founder He Yi confirmed a compensation plan for users who experienced losses directly attributable to Binance's actions, not market movements. Binance leadership emphasized accountability and a commitment to addressing user concerns fairly. The crash served as a significant stress test for blockchain infrastructure, with Solana enduring its largest throughput ever at 100,000 TPS. Hyperliquid reported zero disruptions despite record trading volume, demonstrating the stability of its onchain risk and margining model. Multiple exchanges, including OKX and Hyperliquid, maintained stable operations and reported no downtime. Despite the resilience of some systems, liquidity remains thin, and volatility persists across the market. The event highlighted the fragility of cross-margin mechanisms and the potential for cascading effects from automated liquidations. Traders are advised to proceed with caution and remain aware of ongoing market risks.
