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Leveraged Trading on Binance Takes a Drastic Turn as Users Seek Compensation
Dissatisfied Binance traders continue to express their sentiments on the exchange’s leveraged trading product. Currently, users are now looking forward to taking legal actions and utilizing social media platforms to rally up for compensation from the exchange platform.
On top of that, regions such as Europe, Asia, and America are keen on investigating Binance following the growing complaints from users. Binance customers like Alex Holland narrate how he lost an investment sum of $10,000 between April and May 19, 2021, from leveraging tokens.
Like other users, Holland anticipated profits bearing in mind that there wouldn’t be any major losses from the largest crypto exchange. However, the resulting figure saw his Ethereum down token fall beyond 85% after the second-largest crypto decreased to approximately 20% on May 19, 2021.
The same month also saw massive selloffs after the price of BTC dropped below the $30,000 level. This market crash presented an opportunity to users who hurriedly acquired the leveraged tokens. Nonetheless, the outcome was different since the amount of leveraged tokens in supply escalated and, at some point, decreasing the token’s prices. Thus, users, particularly from Reddit, argued that Binance should be held accountable.
Understanding Leveraged Tokens
Leveraged tokens are products from the Binance exchange that introduce traders to a crypto asset’s price without undergoing liquidations. As a tokenized model of leveraged future versions, Binance Leveraged Tokens (BLVTs) also exclude the need for maintaining and managing margin requirements or collateral.
Ideally, these tokens are meant to maximize profits for users whenever the prices of digital currencies plunge. It further means that a 20% decrease in a cryptocurrency could lead to a 25-80% gain.
Therefore, Binance notes that there were no recognizable bugs in the system that could account for the losses. Despite outlining the risks in engaging with the leveraged token feature, Binance still encounters larger volumes of queries and customer complaints.
Binance Conducts Another Burning Procedure
The world’s largest crypto exchange hosted yet another burning exercise on July 18, 2021. it burned a total of 1,296,728 BNB to remove a specific supply of the native asset from circulation.
This amount is equivalent to $393 million worth of BNB burnt. However, the 16th quarterly burn event has not initiated any price action as the fourth largest crypto asset by market cap maintains a price range of $300.
The last quarterly burn in April 2021 saw the native asset trade at approximately $540 after burning more than $600 million BNBs.