Binance Altcoin Crash: A Trading Bot Mishap or Market Manipulation?

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Coinspeaker
Binance Altcoin Crash: A Trading Bot Mishap or Market Manipulation?

Leading crypto exchange Binance came under the crosshairs of the digital asset community when a sudden and drastic price crash hit multiple tokens.

Investors were left scrambling as coins like ACT, DEXE, and DF plunged, with ACT dropping almost 57% on April 1st and then another 23% on the next day.

The event sent shockwaves through the crypto community, igniting speculation about whether it was a bot malfunction, a sign of impending delistings, or an attempt to manipulate the market.

Following the sharp drop of ACT, TST and other tokens on Binance yesterday, MASK, LEVER and other tokens have experienced a short-term and huge drop again today. LEVER/USDT fell by more than 28% and MASK/USDT fell by more than 29% in a short period of time. The decline of ACT and… pic.twitter.com/PfnH5sIoJx

— Wu Blockchain (@WuBlockchain) April 2, 2025

The Altcoin Crash: What Happened?

ACT had been trading within a stable range for most of March but plummeted from $0.189 to $0.087 in just half an hour. Many other tokens followed a similar path.

The sudden price drop resulted in many traders pointing fingers at automated trading bots. A particular theory suggested that Wintermute, a prominent market-making firm, might have played a role in the crash.

This isn’t an April 1 joke.

Wintermute is pouring assets off their balance sheet where they were acting as MM. Either their wallets have been hacked, or – I have no other explanation yet.

Some very strange things are happening. ACT folded 2x in minutes, +-10 assets are… pic.twitter.com/Bqc3Hhl8KS

— Depression (@0xDepressionn) April 1, 2025

Wintermute’s CEO, Evgeny Gaevoy, was quick to deny these allegations, stating, “Not us fwiw,” he said.

Not us fwiw, but also curious about that post mortem😅

— wishfulcynic (@EvgenyGaevoy) April 1, 2025

On the other hand, some analysts pointed to Binance’s recent update on leverage and margin tiers for various altcoins, including ACT.

These adjustments may have caused traders to rebalance their positions, leading to mass sell-offs and triggering a chain reaction in the market.

Crypto analysts and influencers asked their followers to not use Binance anymore or invest in the altcoins that are being listed on the centralized exchange, claiming that the firm has been manipulating the market.

However, Binance Customer Support told in a reply to journalist Colin Wu that the crash was caused by three VIP users who sold a combined 514,000 USDT worth of tokens, along with a non-VIP trader who offloaded 540,000 USDT worth of ACT.

Binance: The reason is that three VIP users cross-sold tokens worth about 514,000 USDT in the spot market in a short period of time, and a non-VIP user transferred a large amount of ACT from other platforms and sold tokens worth 540,000 USDT in the spot market in a short period… https://t.co/xgXBtHpkl9

— Wu Blockchain (@WuBlockchain) April 1, 2025

This significant selling pressure within a short time window could have easily triggered the massive price drop.

Bad Press for Wintermute

Wintermute has been at the center of multiple similar incidents in the past. In early 2025, the firm was accused of triggering sharp market volatility when it received over $100 million from Binance between January 27 and 28.

Wintermute was also accused of withdrawing liquidity from several Automated Market Makers (AMMs), causing price crashes exceeding 60% for certain tokens.

While Gaevoy denied accusations of market manipulation, stating that their actions were purely related to arbitrage trading, the crypto community remains skeptical of all the events.