REUTERS/Darrin Zammit Lupi
- A service outage on leading crypto exchange Binance left some retail traders unable to curb losses during a sell-off.
- Hundreds of traders are now clamoring for the platform to compensate them for losses incurred.
- Binance attributed the outage to technical problems, WSJ reported.
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A service outage on leading crypto exchange Binance left some retail traders unable to curb their losses during a market sell-off, according to a Wall Street Journal report.
The outage came as crypto markets began to plummet in mid-May, with bitcoin dropping some 23% in half a day. For around an hour, as losses mounted, some traders on Binance were unable to sell their rapidly depreciating crypto holdings, according to the Journal.
According to the WSJ article, margin trading features on Binance pushed some traders interviewed by the Journal into forced liquidations, as their collateral was quickly overwhelmed by the scale of the losses.
In normal downturns, traders can prevent forced liquidations by selling out of their positions at a loss or putting up 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 clamoring for the platform to compensate them for their losses, filing a petition with the company. But Binance, which does not have an official headquarters, is a not under the clear jurisdiction of any one regulator.
Binance attributed the outage to technical problems and said it took “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 one trader who had lost big a three-month premium membership on the platform, and threatened to revoke the offer if he publicized it.
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