A cryptocurrency trader watched helplessly as $3.79 million vanished from their account after Binance suddenly changed its leverage rules. The crypto exchange updated its leverage and margin requirements for USDⓈ-M perpetual contracts without warning, catching traders completely off guard. Talk about a bad day at the office.
The liquidation occurred when $ACT hit $0.1877 – one of the largest wipeouts recorded that day. Not that it helped the token itself. $ACT plummeted 46% within 24 hours, making a bad situation even worse for investors. By the time the dust settled, it was trading at $0.1018, down a staggering 50% for the week. Ouch.
ACT’s nosedive left investors shell-shocked, with prices crashing 46% in just 24 hours while traders watched their millions evaporate.
The fallout wasn’t limited to just one token. Other AI-related altcoins took a beating as market contagion spread. Unlike Kraken, which maintains a high focus on security, Binance’s abrupt rule changes left traders questioning the platform’s reliability. Because nothing says “trust us with your money” like changing the rules mid-game without telling anyone.
The exchange specifically targeted tokens with higher volatility like $ACT. Their lack of communication drew heavy criticism from the trading community. The incident was reported on April 1 according to on-chain data from Lookonchain. Many viewed it as a betrayal of trust – and rightfully so.
Leverage trading always carries risk. It lets traders control larger positions with smaller capital, which is great when things go well. When they don’t? Well, ask our $3.7 million loser. High leverage means high vulnerability, especially when exchanges can change policies on a whim.
This fiasco has amplified calls for greater exchange accountability and trader protections. Some are now looking toward decentralized trading solutions. Can’t blame them.
The incident serves as a stark reminder of crypto’s Wild West nature. Centralized exchanges wield enormous power over traders’ fortunes. The situation highlights why risk management strategies are crucial for surviving in volatile trading environments. Trust is fragile in this space. One policy change, one unannounced update – that’s all it takes to wipe out millions.
Regulators are paying attention. After incidents like this, they might start looking at major exchanges with a more critical eye. About time.
