Service outage on leading crypto exchange Binance has left some retail traders unable to limit their losses during market sell-off, Wall Street Journal finds report.
The outage came as the crypto markets began to collapse in mid-May, with bitcoin dropping 23% in half a day. For about an hour, as losses increased, some traders on Binance were unable to sell their rapidly depreciating crypto holdings, according to the Journal.
According to the WSJ article, the margin trading features on Binance pushed some traders polled by the Journal into forced liquidations, as their guarantees were quickly overwhelmed by the scale of the losses.
During normal downturns, traders can prevent forced liquidations by selling their positions at a loss or by placing additional collateral. The trading freeze meant Binance users had no way to manage their losses for an hour during the crash.
Hundreds of traders are now claiming the platform to compensate them for their losses, by filing a petition with the company. But Binance, which has no official headquarters, is clearly not under the jurisdiction of any regulator.
Binance attributed the outage to technical issues and said it had taken “immediate steps to engage with users affected by the outage,” according to the Journal.
Binance – which has been partially banned in the UK – reportedly offered a trader who lost a large three-month premium subscription to the platform, and threatened to revoke the offer if he made it public.