According to Changpeng Zhao, a market maker from a smaller futures exchange ‘attacked’ Binance’s own futures platform in the early hours of Sept 16. However, the attacker, who is also a Binance trader, seemingly failed and lost a good portion of their own money.
Zhao also pointed out that Binance knows exactly who the attacker is since they are well-known to Binance for their trading activities.
The attacker is a well-known account that trades with @binance, and started their own futures exchange a few months ago. This was the 2nd attempt they tried. Shame!
— CZ Binance (@cz_binance) September 16, 2019
Luckily, no one was liquidated, as confirmed by Zhao himself. The reason why Binance was capable of avoiding losses is the fact that they use the index price for liquidations, instead of the market prices, as many others do.
A few hours after announcing the incident, however, Zhao posted another update, this time saying that he contacted the client that was responsible, and that the two agreed that the attack was not really an attack.
Zhao Under Fire
The community had a field day reacting to CZ’s announcements. Zhao mentioned that the platform using index prices for liquidations was Binance’s innovation, which is something that many have called out as misinformation. BitMEX and many others like it have done the same for a long time.
Others had assumed that the entire ‘attack’ was a scheme concocted so that Binance could introduce the fact that it uses index prices for liquidations.
You created this plot to introduce your innovation. Fabricated scenario.
— Enissay (@PreserveValue) September 16, 2019
Not the First Binance Attack
This is also not the first time that Binance has suffered an attack this year. Only a few months ago, the exchange was successfully hacked for the first time in its history. The attacker managed to infiltrate one of its hot wallets, stealing 7,000 BTC from it, which was at around $40 million at the time. Since then, the hackers have attempted to split up a portion of the proceeds among new wallets, although the exchange has kept a close eye on the stolen funds ever since.
Interestingly enough, Binance’s native cryptocurrency, Binance Coin, did not react to the news of the ‘attack,’ and neither did Bitcoin.
What do you think about the Binance ‘incident?’ Let us know your thoughts in the comments below.
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Images courtesy of Twitter.