The cryptocurrency markets are in freefall and bitcoin has experienced its worst two-day loss for over two months. However, the cause for the drop is unclear and speculation over Japanese regulatory clampdown, Binance hack/rogue trading bot, BitMEX downtime and a recent SEC announcement.
Worries over security at Binance have been spreading from a post on reddit with a user that claims to have had their coins sold at market price. Which essentially means that their entire holding was dumped into the market. Some redditors have been speculating that the market selling was caused by a popular trading bot gone rogue with others maintain it was a hack. If it was a bot it raises the question of how credible the reports on reddit are, as users were claiming they had no API trading enabled.
Binance Update: There was no hack! A trading bot that some were using to trade automatically maliciously traded all alts into BTC and then bought VIA. If you weren't using the BOT you are not affected.— Ran NeuNer (@cryptomanran) March 7, 2018
One user on Twitter posted a screenshot of their trade history showing a host of altcoins being sold at market:
However, you may have noticed VIA coin was the one exception here. VIA coin pumped 1100% in roughly a minute and there are rumors of unauthorised market buys on this coin causing the illiquid order book to be pumped. Here is a VIA chart over the last 24 hours on Binance:
Binance CEO has just released a tweet stating that funds are safe, however, there was irregular trading activity. No statements over the unauthorised market selling or rogue trading bots have been made yet.
All funds are safe. There were irregularities in trading activity, automatic alarms triggered. Some accounts may have been compromised by phishing from before. We are still investigating. All funds are safe.— CZ (not giving crypto away) (@cz_binance) March 7, 2018
Many users at BitMEX are reporting prolonged downtime and that the trading engine is lagging. Traders have been unable to manage their positions over the last two hours which has led to huge liquidations whilst the market crashed. The images below from the BitmexReky twitter bot show the severity of the liquidiations. These liquidations were within 60 seconds of each other!:
The SEC released a public statement earlier today titled ‘Potentially Unlawful Online Platforms for Trading Digital Assets’. The statement discusses the requirement of any exchange that facilitates the trading of a security token to register with the SEC.
An excerpt from the statement reads:
“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as "exchanges," which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”
Japanese Exchanges Punished
Japan’s financial regulator (FSA) has given punishment notices to a few cryptocurrency exchanges this week. An article from Reuters cites sources that suggest there are plans to suspend their business. Flaws in consumer protection and AML measures during exchange investigations spurred the FSA to initiate the clamp down. It is unclear which exchanges have been targeted and how severe the fines will be.
The MtGox trustee that controls around 200,000 BTC is thought to have contributed to the selling pressure over the past two months. He claims to have sold over 35k bitcoins during this period and there are speculative rumours that the trustee is selling aggressively in March. The trustee was reported to have sold bitcoins on exchanges as opposed to OTC which led to severe drops on December 22nd and January 17th.
CryptoGlobe will cover the market situation as it develops.