Binance fixes spot price glitches caused by old orders and UI bugs, pledging $283M in compensation to restore user confidence.
Binance recently detailed the causes of significant spot price anomalies. The exchange committed a massive $283 million to user compensation. The company determined two primary technical causes of the price glitches. This immediate financial correction is to restore the confidence of the users at the earliest. Binance claimed that this step aligns with its principle of putting users first.
Binance Pinpoints Legacy Limit Orders and UI Glitches
The global macroeconomic developments created extreme volatility. This occurred between 20:50 and 22:00 UTC recently. Institutions and retail participants were selling aggressively. As a result, the cryptocurrency market declined substantially. This time was characterized by very volatile trading for everyone.
Binance did a thorough internal audit and took immediate action. In particular, the core spot and futures matching engines were stable. The API trading was also executed without any interruptions. Data indicated that compelled liquidations were low. This confirmed volatility was driven primarily by the general market conditions.
The review confirmed short technical problems after 21:18 UTC. De-pegging problems occurred later in the case of some assets. These de-pegging problems were caused by extreme market moves. However, the exchange promised to treat these issues openly. Being transparent is still a key value for the platform.
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There were two major causes of the price anomaly. First, historical limit orders got activated. These orders were as old as 2019 for assets such as IOTX and ATOM. Thus, focused sell orders were filled against these old limits. This act forced prices of tokens to dip briefly.
The second issue was a function display problem of “zero price.” Close to the above, some trading pairs had fewer decimal places. This was because of recent trends in the movement in the minimum price. As a result of the UI displayed prices as zero for a brief period of time. This was a pure display error and nothing changed when the code was actually run. Display bugs have now been removed on the UI. API interface is completely unaffected with these changes.
$283M Compensation Package Targets Depegged Collateral Losses
Binance now said that affected users were compensated promptly. This was done within 24 hours of the event. In other words, the compensation was meant to cover losses from depegged collateral assets only. Accordingly, the total distribution of compensation is about $283 million.
The crash was not due to Earn product de-pegs. Rather, price depreciations preceded the de-pegging event. Prices were the lowest from 21:20 to 21:21 UTC. The extreme de-pegging happened much later at 21:36 UTC. Thus, it was not the reverse; the de-pegs caused the market crash.
The compensation includes users liquidated while holding these depegged assets. The impaired assets were USDE, BNSOL, and WBETH. Binance ended up covering the entire loss these liquidations created. In addition, remuneration also covers short delays in internal transactions. Some users’ margins weren’t topped up timely due to these delays.
Binance co-founder Yi He refuted FUD claims. She added that the main engines were stable during the event. Therefore, the claims of a complete Binance outage are inaccurate. She confirmed that Binance Futures are market price mechanism based. This mechanism ensures that liquidations are not unfair. It automatically removes abnormal spikes in price from the calculation.
The exchange offers continual review of user cases. They will keep complete transparency in the process. Binance will keep updating the community about the compensation progress. In the end, this assures that all affected user cases are correctly handled promptly. The platform will focus on continuously enhancing system performance and risk controls.
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