Actually, it wouldn't be a big deal if not modified, but if they wanted to modify, they shouldn't have spoken like this.
Written by Eric, Foresight News
In the past two days, Binance's modification of the lowest price events that occurred during the extreme market conditions last weekend, including trading pairs such as ATOM/USDT and IOTX/USDT, has ignited public opinion. A large number of users on X have shared data comparisons before and after the modification.
Regarding this, many people believe that Binance's move is to cover up the fact that some investors suffered losses due to the extreme prices on Binance. At the same time, it is also whitewashing the problem that these extreme prices only occurred on Binance due to its poor management of the leverage that investors can use. As public opinion continued to ferment, Binance actually changed the price back. Some careful users found that after Binance restored the data, the data in the 3 - day K - line chart was still the data after the first modification, but by the time of writing, this "bug" had been resolved.
Facing the questioning of a large number of users, He Yi also helplessly said on X: "When there are too many people, it's hard to lead the team. If you leave it to the team, you have to come out and apologize and clean up the mess. Binance is still the same Binance, but the execution really needs to be polished and polished again." "There is no motive or reason for the K - line incident. It's completely that someone in the team got carried away and thought the announcement had explained it clearly enough."
All of this originated from a Binance announcement.
During the market plunge that occurred in the early morning of October 11th, Beijing time, the prices of altcoins including ATOM and IOTX on Binance almost dropped to zero, and the decline was extremely abnormal compared with other exchanges. In the early morning of October 13th, Binance released the "Explanation of Recent Market Volatility and Latest Progress of User Protection Measures" announcement. The third part of the announcement, "Explanation of Extreme Prices of Some Spot Trading Pairs", explained the reasons for this situation.
Binance stated in the announcement that there are two main reasons for the "price drop to zero". First, there are some historical limit orders on the platform that have been placed for many years (some can be traced back to 2019, such as IOTX and ATOM). In extreme market conditions, a large number of market sell - orders led to one - sided liquidity. The system continued to match market sell - orders, and the historical limit orders were triggered, causing the token price to be instantly pushed to an extremely low level, thus forming the "price wick" phenomenon. Second, for some trading pairs (such as IOTX/USDT), due to the recent reduction in the number of decimal places of the minimum price change, the decimal places of the transaction price could not be correctly displayed, creating the illusion that the price "dropped to zero" visually.
In plain language, the reason is that there are some old - time users who may have even forgotten their account passwords. They placed limit buy - orders at extremely low prices for fun in the early years and forgot to cancel them. When the market plummeted, if there were no such buy - orders, the price might have stopped falling at a certain level. But precisely because of these "for - fun" orders, the market sell - orders were directly transacted at extremely low prices. The second reason is that the prices of some trading pairs actually did not drop to zero, but because there were too many decimal places that were not displayed, the front - end directly showed zero.
This explanation is actually reasonable, but what really caused controversy was the following "optimization plan":
That is to say, Binance chose to modify the K - line price to "optimize the front - end display logic". Perhaps this can explain the anomaly of the IOTX/USDT trading pair, but the lowest price of ATOM before modification did not drop to zero, and there were indeed limit buy - orders placed at very low prices and they were transacted. So where does the "display logic" problem come in?
Vida, the founder of Formula News, tweeted yesterday afternoon that according to the order book and transaction records of Binance's real - time push that he recorded, the ATOM/USDT trading pair indeed stayed at the price of 0.001 USDT for 8 milliseconds due to transaction orders, and 47.52 ATOM were transacted. For IOTX, 110 million were transacted at an extremely low price. Vida speculated that it might be due to the unified account of an institution that used IOTX as margin for leveraged trading being liquidated, resulting in the abnormal price.
This further confirms that these extreme prices were not "display errors", but rather that actual orders continuously transacted, pushing the price to zero. Binance's self - contradictory statements have drawn a lot of criticism on X. Putting aside some voices that took the opportunity to vent their emotions, the author has summarized two main points that caused dissatisfaction:
The first, represented by the view of 0xAA, the founder of WTF Academy, is that the information in this announcement is not transparent. Binance did not clearly state whether any users suffered losses due to the extreme prices of spot products, nor did it clearly state which K - line prices would be adjusted. Just a sentence "no further announcement will be made" seems too perfunctory.
The second is the common view of many users, that is, if a simple announcement can modify the price displayed on the K - line, and if modifying data is such a casual thing, how can we believe that you haven't "tampered" with other data?
For an exchange, modifying K - line data, such a major matter, should be done with extreme caution, because even with sufficient reasons, it will inevitably invite doubts. Binance should not have made such a blunder that added fuel to the fire when it was already being criticized for some of its assets de - pegging and the market was热议 that DEX is challenging CEX. It's not that K - line data cannot be modified, but if it can be honest about whether the extreme prices of spot products actually caused user losses, and explain that the data is adjusted to prevent some indicators from being distorted due to extreme prices, and clearly state when and which trading pair data will be adjusted, perhaps this public opinion crisis could have been avoided.
Of course, things haven't developed to an irreparable stage yet. Binance still has the opportunity to rebuild users' trust with a more sincere attitude and more detailed explanations. On the other hand, this incident has also served as a warning to Binance and all cryptocurrency exchanges. In the highly volatile cryptocurrency market, exchanges should be responsible for maintaining market stability as much as possible within their capabilities. In the future, exchanges may need to impose more detailed restrictions on the leverage ratio in the market to prevent the harm of black - swan events from being infinitely magnified due to over - leverage.