Crypto.com CEO Kris Marszalek urged regulators to investigate exchanges that saw the most liquidations during the biggest crypto market crash on Saturday. In an X after on October 11, Marszalek said regulators should “conduct a thorough assessment of the fairness of the practices” of the ten exchanges with the most liquidations in the previous 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 together accounted for more than $37 billion in liquidations within 24 hours. Other exchanges on the list include OKX, HTX, Gate, CoinEx, Bitfinex and Bitmex.
What regulators should look at
According to Marszalek, regulators need to review several aspects of the aforementioned exchanges. For example, authorities should consider investigating whether any of the exchanges faltered to the point where investors could no longer 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 investigation should be whether the exchanges’ internal trading teams have a full Chinese wall to ensure no conflicts of interest arise, Marszalek wrote. He added:
“$20 billion in liquidations, many users were injured. The job of regulators is to protect consumers and ensure market integrity.”
Several investors have complained about unfair stock market practices
Several crypto investors took to X to complain about the challenges they faced while trading during the Saturday crash.
Chief among them were Binance users, who experienced problems executing trades or accessing various features during the crash. A crypto investor who uses ‘Cowboy’ on called Binance the “biggest scammers in crypto.”
Cowboy alleged that Binance locked users out of their accounts and denied investors access to their funds during the crash. Limit orders and stop-loss features were also unavailable during the crash, which caused Binance to “maximize profits during the largest liquidation event in history,” he noted, adding:
“By preventing users from managing their positions or ‘hunting to the bottom,’ Binance essentially turned a market collapse into their own profit machine.”
Cowboy further claimed that Binance CEO Richard Teng could face jail time due to the exchange’s malpractices.
Another user, who uses the pseudonym ‘ElonTrades’ on marked that bad actors exploited a flaw in Binance’s pricing structure to artificially devalue the USDe, leading to forced liquidations worth hundreds of millions of dollars.
According to ElonTrades, Binance valued USDe, BNSOL and WBETH based on its own order books, rather than an oracle. When exploiters dumped around $60 million worth of USDe on Binance, it caused the stablecoin to settle on the exchange, liquidating the positions of those using the token as 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 influence.”
Binance recognized with “platform-related issues” that affected users and announced that it would compensate them. Teng noted that Binance will “learn from what happened” and remain committed to doing better in the future.
Binance co-founder Yi He commented:
“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.”
