Binance futures market maker ‘attack’ turns out to be a bug 🚨 This article is 5 years old...
Binance futures market maker ‘attack’ turns out to be a bug
2 min read
Updated: Nov. 7, 2019 at 6:01 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Binance almost became the victim of a market maker attack in the early hours of Sep. 16. However, CEO Changpeng Zhao soon revealed that the “attack” on the new futures platform was actually the result of a bug, causing the crypto-community to criticize him for making hasty accusations.
A “known” market maker allegedly attacks Binance
After officially opening for business on Friday, Sep. 13, the eyes of the crypto industry were pointed at Binance’s futures platform. While the weekend went on without any hiccups, the platform saw some serious drama as the workweek began.
Changpeng Zhao, the CEO of Binance, announced that a market maker tried to attack the futures platform. In a Twitter post, Zhao said that the attacker was a “market maker” from a small futures exchange, but that no one was liquidated.
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
Zhao shared a screengrab of the futures platform that showed Bitcoin futures briefly dropping from $10,324 to $10,042.
In a follow-up tweet, Zhao explained that a “well-known” account was responsible for the failed attack, adding that this was the second time such an attack was tried on Binance.
The attacker is a well-known account that trades with @binance, and started their own futures exchange a few months ago. This was the 2nd attempt they tried. Shame!
— CZ Binance (@cz_binance) September 16, 2019
The alleged attacker didn’t manage to take advantage of the sudden price dip and force other Binance users to get liquidated. Zhao explained that this was prevented by the fact that Binance’s futures platform doesn’t use the futures price for liquidation, but the exchange’s own index price.
Market maker attack actually a bad parameter
However, Zhao has been known to be quick on the trigger when it comes to reactions and accusations, especially on Twitter, which is why most of his followers took the announcement with a grain of salt.
Many criticized him for posting harsh accusations without investigating the matter first, saying rash decisions like that made them trust Binance less.
Imagine being so unprofessional that you publicly call someone out for manipulation without the facts
— Ben (@BenLearnsTradin) September 16, 2019
It quickly turned out that the sudden drop in futures prices wasn’t the result of a malicious attack, but a consequence of a bug on the platform.
An hour after posting the original tweet, Zhao said that he had a chat with the client he suspected was responsible for the attack and found that it was an accident due to a “bad parameter on their side.”
While Zhao has been known to handle situations like these a bit more lighthearted than other exchange execs, few seemed to support the way he handled this.
Even Binance Coin (BNB) couldn’t stay immune to the drama—the exchange’s native token dropped 2.2 percent following the news.
BNB Market Data
At the time of press 6:01 am UTC on Nov. 7, 2019, BNB is ranked #8 by market cap and the price is down 2.58% over the past 24 hours. BNB has a market capitalization of $3.15 billion with a 24-hour trading volume of $148.74 million. Learn more about BNB ›
Crypto Market Summary
At the time of press 6:01 am UTC on Nov. 7, 2019, the total crypto market is valued at at $263.51 billion with a 24-hour volume of $49.81 billion. Bitcoin dominance is currently at 69.38%. Learn more about the crypto market ›
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Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.