Binance Under Pressure to Disclose Full Liquidation Statistics in the Aftermath of $10 Billion Market Turmoil
The recent turmoil in the cryptocurrency market on 3 February led to an estimated market-wide liquidation of approximately $8 billion to $10 billion, according to Ben Zhou, one of the founding members and current CEO of Bybit. This figure is significantly higher than the initial report of $2 billion provided by Coinglass, a data aggregator for crypto derivatives.
Zhou pointed out that many exchanges, including Bybit, have restricted access to liquidation data for platforms like Coinglass. However, following public outcry, he has pledged to release complete information as numerous prominent traders faced significant losses during the recent liquidation event. Zhou stated,
“I suspect that the total actual liquidation amount today far exceeds $2 billion and should be in the range of $8 billion to $10 billion. For your information, Bybit alone saw liquidations totaling $2.1 billion over a 24-hour period. Bybit is committed to providing full transparency by sharing all liquidation data.”
The Crypto Liquidation Crisis – Will Binance Follow Suit?
In response, Coinglass has called on Binance, the largest cryptocurrency exchange globally based on trading volume, to divulge all its liquidation data. The data aggregator revealed that Binance limited access to liquidation information in mid-2021, citing concerns about regulatory scrutiny and potential impacts on its ongoing business operations.
In layman’s terms, liquidations occur when the collateral held by traders falls below the required margin in leveraged markets where borrowed funds are utilized. While traditional markets typically issue margin calls to warn traders about impending liquidation risks, crypto exchanges opt for forced liquidations in situations where positions are deemed too risky to maintain. Unfortunately, these forced liquidations have resulted in substantial losses for traders, with some individuals losing their entire investments during liquidation cascades.
One such case was shared by user Hanwe Chang, who recounted a harrowing experience of losing everything on 3 February. Additionally, another individual, Tyler Durden, who is both a user and crypto investor, highlighted that several top traders with eight-figure portfolios were among those liquidated during the recent market turbulence.
“I know of a few eight-figure traders who were liquidated yesterday. Manage your risk at 1-2%. Consistency is key. Alternatively, focus on accumulating Bitcoin and remain cautious.”
Despite Coinglass’s request for full access to liquidation data, the current CEO of Binance, Richard Teng, has not directly addressed the issue. Instead, Teng mentioned that market volatility in the crypto space is expected to decrease as the market matures.