Friday 13th Binance Scam: by @ashcash

I’m writing to tell you my story on Binance on Friday, March 13, with BULL tokens (issued by FTX Exchange). If you also had such problems, especially if you are USA citizen — feel free to contact as I`m preparing collective complaint to SEC and CFTC. You can easily find me in Telegram (@ashcash).

Here’s my sad story or how I lost 3164.93 USDT in an hour due to miscorrelations and miscalculations of Binance.

On March 13th after great dump which, I decided to start forming position about 15:00 as the priced calmed a while down. For the last month I used BEAR tokens very productively, so at last it came time for BULL ones .

I was excited to use BULL tokens, as Binance assumes this tokens follow basis asset x3, if basic asset moves +1%, BULL token moves +3% (https://www.binance.com/en/support/articles/360038933471). So I opened positions in pairs: BULL/USDT, ETHBULL/USDT, EOSBULL/USDT, XRPBULL/USDT.

And then magic happened, without any correlative move of basic assets BULL tokens dropped from 40% to 65% percent. Below attaching screenshots and detailed explanations.

Said that Binance, I really liked till the moment, ignores my complaint about losses refund — wrote their support twice. Binance angels from Telegram group forwarded me to FTX, whom I wrote also. Was sadly surprised by their answer, to cut a long story short “it`s your problem, go to Binance with your complaint”.

The worst thing is they knew such price miscorrelation could happen, they had such accidents in September 2019 (screen of FTX support answer also attached). But neither Binance who listed BULL/BEAR tokens 17/01/2020, nor FTX posted this precaution. If Binance took care of its users they could stop trading BULL tokens till they come back in right correlation with basic assets, or at least post note about possibility of such problem.

Nothing was done by Binance, absolutely, and they even let themself to ignore such complaints. Even Bitmex refunded to their users losses caused by miscalculations.

Don’t let Binance full you and steal your money — connect me @ashcash and join https://t.me/scam_binance in Telegram, I`m sure our collective complaint to SEC and CFTC will make Binance to refund losses and be more responsible. The exchange feel very free as there`s no legislative regulation — let us, users, make them be responsible and careful about our funds and prevent such things happen in future.

Shame upon you, CZ! Our funds are not “safu”…

Attachment:

BULL/USDT delayed the price of basis asset Bitcoin 40 minutes it caused loses which I demand to compensate.

BULL time: 15:20, price 4091 USDT, then price drops to 2293 USDT at 16:00.
But Bitcoin didn`t move so much at this time: 15:20, price 6070 USDT, at 16:00 price was 6011 USDT. Such price movement couldn`t lead to BULL token to drop more than 40%. Had to close with a loss at 22:26 price 2438 USDT, managed to gain 6.3%.

I demand 100% compensation of all losses (671,35 USDT) and ungained profits (671.35*6.3%=42.29 USDT), total compensation 713,64 USDT.

BULL/USDT
BTC/USDT

ETHBULL/USDT delayed the price of basis asset Bitcoin 1 hour and 10 minutes it caused loses, which I demand to compensate.

ETHBULL time: 15:20, price 535 USDT, then price drops to 165 USDT at 16:30.
But ETH didn`t move so much at this time: 15:20, price 140 USDT, at 16:30 price was 127 USDT. Such price movement couldn`t lead to ETHBULL token to drop more than 65%. Had to close with a loss at 22:27 price 185 USDT, managed to gain 12 %.

I demand 100% compensation of all losses (1041,98 USDT) and ungained profits (1041.98*12%=125.03 USDT), total compensation 1167,02 USDT.

ETHBULL/USDT
ETH/USDT

XRPBULL/USDT delayed the price of basis asset Bitcoin 1 hour and 10 minutes it caused loses, which I demand to compensate.

XRPBULL time: 15:22, price 23.49 USDT, then price drops to 16.12 USDT at 16:30.
But XRP didn`t move so much at this time: 15:22, price 15.62 USDT, at 16:30 price was 15.29 USDT. Such price movement couldn`t lead to XRPBULL token to drop more than 31%. Had to close with a loss at 22:31 price 20.12 USDT, managed to gain 24.8 %.

I demand 100% compensation of all losses (229,31 USDT) and ungained profits (229.31*24.8%= 56.86 USDT), total compensation 286,18 USDT.

XRPBULL/USDT
XRP/USDT

EOSBULL/USDT delayed the price of basis asset EOS 1 hour and 10 minutes it caused loses, which I demand to compensate.

EOSBULL time: 15:24, price 17.37 USDT, then price drops to 6.92 USDT at 16:30.
But EOS didn`t move so much at this time: 15:22, price 2.13 USDT, at 16:30 price was 2.06 USDT. Such price movement couldn`t lead to EOSBULL token to drop more than 60%. Had to close with a loss at 22:23 price 8.10 USDT, managed to gain 17 %.

I demand 100% compensation of all losses (853,07 USDT) and ungained profits (853.07*17%= 145.02 USDT), total compensation 998,09 USDT.

EOSBULL/USDT
EOS/USDT
FTX Support Answer

Network congestion is today’s problem

Network congestion often hits in the worst possible time — MakerDAO 12th of March case

The world is in turmoil — markets are crashing and Covid-19 pandemic gets worse every hour. You don’t need extra problems in this environment but this is exactly the time where many systems are stress tested and flaws appear. Unfortunately, for MakerDAO, the provider of stablecoin DAI, problems just started with the market crash.

12th of March — the market crash

MakerDAO is a dominant player in the decentralised finance realm. It offers a solution that allows you to use your ETH or BAT cryptocurrency as collateral and create a stablecoin DAI out of them. You need to collateralise more than 150% worth of the underlying asset (ETH or BAT) to keep your position from liquidation.

On the 12th of March, the ETH price crashed more than 30% in a matter of hours. A lot of positions fell under the required collateralization level and liquidation process started. This is normal behaviour for MakerDAO, but the extreme market situation pushed the system to its limits.

Market crashes always cause a lot of activity t — users move their holdings to safer places, need to add more collateral to leveraged positions, or just need to re-capitalise from the market moves. This activity clogged the Ethereum network: transfers got slow and network fees went through the roof. For MakerDAO, this meant that many were not able to act in time to protect their positions and got liquidated before they could act.

etherscan.io
etherscan.io

Liquidators POV

On the other side, liquidators had a similar situation. Clogged network and fast-falling prices prevented Keepers (users who liquidate and buy these positions) from liquidating positions in a timely manner. In addition to that, the MakerDAO price feed was lagging behind actual market rates. For example, at one point the quoted price of 160 dollars for 1 ETH in the MakerDAO price feed was in reality 130 dollars per 1 ETH on exchanges. This meant the 3% discount provided to Keepers on liquidated positions was still considerably higher than the actual market price, preventing Keeprs from entering the internal MakerDAO liquidation market. However, even if they wanted to bid, the Ethereum network was so congested that it kept them from bidding on the available positions.

This situation was capitalised on by one Keeper who was willing to pay high fees to get into the network and made basically zero dollar offers for the locked Eth collateral assets. As incoming cash was held up in network congestion, many users lost all their collateral (instead of 13%, the expected maximum loss in normal collateral call situations on MakerDAO). As the Eth collateral had been purchased for zero dollars, this subsequently introduced about 4 million dollars worth of bad debt into the MakerDAO system, resulting in a material loss for both the people who’s collateral had been liquidated at zero value, and a loss for the holders of Maker, the loss bearing token that stands behind the collateralised contracts on MakerDAO.

The one redeeming feature of the lag in the price feed is that it arguably helped some users to win time and come in to add extra collateral to their position to prevent liquidation.

Congestion, even a possibility of it, introduces fear

Clogged network events like the 12th of March or Crypokitties situation are more than just a temporary network slowdown.

  • These events prevent creating an environment that users trust
  • They cost real money for network users — from higher fees to lost positions because it wasn’t possible to act in a timely manner.
  • Throughput volatility and cost will deter businesses from the network. Joining a network that can kill them with its fees or slowness is an unnecessary risk.

Over two years on from Cryptokitties causing the first big network congestion event, Ethereum is still showing that it is not ready for products that need to handle big throughput during periods of peak load. This time, real money was lost.

Linear scalability is needed today

Ethereum is still in its early days but its usage is growing rapidly. Early adopters are more willing to go along with various problems, unfair situations and take risks, but it’s not suitable for everybody.

As the network and its various products mature, we need an environment that is able to act as a value layer on top of the internet. As it was the case with the internet, many use cases today were not even imagined at the beginning. The same thing is happening with decentralised value protocols. Any exponentially slowing function is not future proof — linear scalability is desperately needed to future proof the decentralised revolution currently underway.

Radix has a laser-sharp focus on building a linearly scalable, low fees network that is able to offer anyone anywhere friction-free access to the digital economy. Read more on how Radix DLT will achieve the future of scalability with its unique data model, Cerberus consensus and Radix Engine https://www.radixdlt.com/post/cerberus/

Piers Ridyard, CEO of Radix DLT