Binance Faces Heat: $8-10B Crypto Carnage Demands Transparency

Binance, the world's largest cryptocurrency exchange by trading volume, is facing pressure to disclose full liquidation data following a recent market-wide carnage estimated to be around $8 billion to $10 billion. This figure is significantly higher than the initially reported $2 billion by Coinglass, a crypto derivatives data aggregator.

Ben Zhou, Co-founder and CEO of Bybit, revealed that most exchanges, including Bybit, limit liquidation data accessed by Coinglass. However, he pledged to grant full access following online outcry, stating that "Bybit will start to push all liquidation data. We believe in transparency."

In response to the growing concern, Coinglass urged Binance to disclose all its liquidation data. The data aggregator noted that Binance restricted liquidation data access in mid-2021, citing unwanted regulator attention and likely impact on its perpetual business.

Liquidations occur when traders' collateral falls below the margin required in levered markets. In most cases, traders are notified of the liquidation risk through a margin call. However, given the volatile nature of crypto, exchanges trigger forced liquidations whenever they deem traders' positions risky to stop further losses. Unfortunately, such forced liquidations have exposed traders to massive losses, with some losing everything during liquidation cascades.

X user Hanwe Chang admitted his devastating story after losing everything on 3 February. Another user and crypto investor, Tyler Durden, also acknowledged that he knew some of the top 8-figure traders who were liquidated after the recent episode. Durden cautioned traders to only risk 1-2% in margin trading or avoid it all and bet in the spot markets.

Worth noting, however, that current Binance CEO Richard Teng didn't directly respond to Coinglass's request for complete access to liquidation data. Instead, the executive stated that crypto market volatility will reduce as the market matures.