ACT and Several Other Altcoins Suddenly Crash 50% on Binance: Here’s What Happened

The ACT token, as well as several other altcoins, witnessed sharp slumps on Binance today, with varying speculations around the actual cause.

A dramatic event occurred on Binance at around 10:30 UTC when multiple altcoins, including Act 1: The AI Prophecy (ACT), experienced sharp price declines. Blockchain reported Colin Wu first called attention to the development.

Notably, the price of ACT/USDT plummeted by over 49% within just 30 minutes, while DEXE/USDT dropped more than 23%, and DF/USDT fell by over 16%. Several other tokens, including KAVA, HIPPO, LUMIA, TST, and BANANAS31, also suffered significant losses. 

At press time, ACT still trades around $0.1, down 49% in 24 hours. Notably, these sudden crashes were primarily due to large sell orders executed in rapid succession, which triggered a surge in spot trading volume.
Speculation on the Cause of the Crash
Beniduboss, a well-known crypto trader, asserted that a bot linked to Wintermute, a major market-making firm, may have been responsible for the abrupt sell-off. 

He suggested that a Wintermute bot might have malfunctioned or suffered a liquidation, causing the market crash. The analyst noted that it would be difficult for the Wintermute team to present the issue in a way that would not harm the firm’s reputation.

However, Wintermute’s CEO, Evgeny Gaevoy, dismissed this claim, clarifying that the bot in question was not from Wintermute. 

https://twitter.com/EvgenyGaevoy/status/1907026688464003112?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank

Interestingly, an a16zdao partner also alleged that Wintermute was responsible for the collapse of ACT but suggested that a different whale was behind the dumps of other tokens. 
Analysts Highlight Possible Triggers
Meanwhile, Vladislav, a crypto analyst, observed that Wintermute had been offloading assets from wallets where they previously acted as market makers. He suggested that either the firm had suffered a hack or something else was wrong.

Further analysis from Lookonchain, a blockchain surveillance resource, confirmed that Binance had recently adjusted the leverage and margin tiers for specific tokens, including ACT. 

https://twitter.com/lookonchain/status/1907037714014515336?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank

This led to a massive liquidation of a whale’s position, amounting to $3.79 million at a price of $0.1877. Following this event, ACT’s price continued to plunge by more than 50%, signaling a cascading effect in the market.

Further, Wu called attention to disclosures from Benson Sun, a former FTX community partner, which corroborated Lookonchain’s analysis. According to Sun, the primary catalyst behind the crash was Binance’s decision to revise the leverage position limits on ACT. 

https://twitter.com/WuBlockchain/status/1907044761707729362?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank

The new rules imposed a restriction where traders using 1x leverage could only open positions up to $4.5 million. As a result, several market makers who had exceeded this threshold saw their positions forcibly closed at market prices. 

Notably, this abrupt liquidation led to a sharp contract price drop, which in turn created a significant disparity between the contract price and the spot price, ultimately triggering a sell-off.