Crypto.com CEO Kris Marszalek urged regulators to investigate exchanges that saw the most liquidations during the largest crypto market crash on Saturday. In an X post on Oct. 11, Marszalek said that regulators need to “conduct a thorough review of fairness of practices” of the ten exchanges with the most liquidations in the preceding 24 hours.
Marszalek attached a photo listing the exchanges that require investigation. Hyperliquid topped the chart with $19.35 billion in liquidations, followed by Bybit and Binance with $10.31 billion and $4.5 billion in liquidations, respectively.
The top five exchanges collectively accounted for over $37 billion in liquidations within 24 hours. Other exchanges that featured on the list include OKX, HTX, Gate, CoinEx, Bitfinex, and Bitmex.
What regulators should be looking at
According to Marszalek, regulators need to review several aspects of the above-named exchanges. For instance, authorities should consider digging into whether any of the exchanges faltered to the point where investors could not trade.
Similarly, Marszalek also questioned whether these exchanges priced all trades correctly and “in line with indexes.” The exchanges’ trade monitoring and anti-money laundering programs also require investigation, he noted.
Another aspect of the probe should be whether the internal trading teams of the exchanges have a full Chinese-wall to ensure there is no conflict of interests, Marszalek wrote. He added:
“$20B in liquidations, a lot of users got hurt. The job of regulatory bodies is to protect the consumers and assure market integrity.”
Several investors have complained about unfair exchange practices
Several crypto investors took to X to complain about facing challenges while trading during the crash on Saturday.
Foremost among them were users of Binance, who faced difficulty executing trades or accessing different features during the crash. For instance, a crypto investor who goes by ‘Cowboy’ on X, called Binance the “biggest scammers in crypto.”
Cowboy alleged that Binance froze users out of their accounts during the crash and prevented investors from accessing their funds. Limit orders and stop-loss functions were also unavailable during the crash, which ensured that Binance “maximized profits during the largest liquidation event in history,” he noted, adding:
“By blocking users from managing their positions or “longing the bottom,” Binance effectively turned a market meltdown into their own profit machine.”
Cowboy went on to claim that Richard Teng, CEO of Binance, could face prison-time for the malpractices of the exchange.
Another user, who goes by the pseudonym of ‘ElonTrades’ on X, highlighted that bad actors exploited a flaw in Binance’s price structure to artificially depeg USDe, leading to hundreds of millions of dollars worth of forced liquidations.
According to ElonTrades, Binance valued USDe, BNSOL, and WBETH as per its own order books, instead of an oracle. When exploiters dumped around $60 million worth of USDe on Binance, it caused the stablecoin to depeg on the exchange, liquidating the positions of those who used the token as a collateral.
ElonTrades wrote:
“What looked like chaos was actually a coordinated exploitation of Binance’s internal pricing system, amplified by a macro shock and systemic leverage.”
Binance acknowledged having “platform-related issues” that impacted users and announced that it will compensate them. Teng noted Binance will “learn from what happened” and remain committed to doing better in the future.
Binance co-founder Yi He noted:
“The reason Binance is Binance is that we never shy away from problems. When we fall short, we take responsibility—there are no excuses or justifications.”