On April 14, someone put a sale order for 2,500 bitcoin, worth around $ 212 million, on the binance command book at $ 85,600, around 2-3% The cash prices were negotiated at the time.
Seeing such an important order, the price of Bitcoin began to gravitate at this level around 5:00 p.m. UTC.
Suddenly, the order has disappeared, as we can see by using money glass data, which caused a brief moment of apathy of the market while the bulls and bears are fighting to fill a liquidity vacuum.
The price of bitcoin at the time, however, was already on trembling ground due to geopolitical concerns. Subsequently, he dropped after the order to disappear caused chaos for merchants.
So what happened?
An answer could be an illegal technique that involves placing a large limit order to the rile trading activity, then deleting the order once the price is close to filling it. This is called “the usurpation of order”, defined by the law of 2010 on Dodd-Frank as “the illegal practice of teaching or offering with the intention to cancel before execution”.
As we can see in the liquidity thermal card in the image above, on the surface, the order with a price of $ 85,600 seemed to be a key area of resistance, which is why market prices began to gravitate towards it. However, in reality, that order and liquidity have probably been usurped, giving traders the illusion of a stronger market.
Liquidide ills Chiel viewed a cord on an exchange and showing on what part an asset is based on the book at each price. Traders will use a thermal card to identify the support and resistance areas or even to target and press under-press positions.
In this particular case, the trader seemed to have placed a possible usurpation order when the American equity market was closed, generally a low liquidity period for the Bitcoin 24/7 market. The order was then removed when the American market opened as the price was moving towards filling. This could still have had the desired effect, because, for example, an important order on an exchange could stimulate traders or algorithms on another exchange to eliminate their order, creating a vacuum in liquidity and subsequent volatility.
Another reason could be that the trader placed an order of sale of $ 212 million on Binance wanted to create a short -term sales pressure to fill up on limit purchases, then they deleted this order once these purchases were completed.
The two options are plausible, although still illegal.
“Systemic vulnerability”
The former BCE analyst and OAK Security CEO, Dr. Jan Philipp, told Coindesk that manipulative trading behavior is “systemic vulnerability, especially in thin and unregulated markets”.
“These tactics give sophisticated actors a coherent advantage over retail traders. And unlike Tradfi, where usurpation is explicitly illegal and supervised, crypto exists in a gray area.”
He added that “the usurpation must be taken seriously as a threat because it has helped to trigger the 2010 flash accident in the traditional markets, which have erased nearly 1 billion of dollars of market value”.
Binance, meanwhile, insists that he plays his role in prevention of market manipulation.
“The maintenance of a fair and ordered commercial environment is our absolute priority and we invest in internal and external monitoring tools which permanently monitor the exchanges in real time, incoherent or diagrams which depart from the normal behavior of the market,” said a spokesperson for Binance in Coindesk, without going directly to the case of the Van at $ 212 million.
The spokesperson added that if someone has found manipulating markets, he will freeze the accounts, will signal a suspicious activity to regulators or withdraw the bad players from his platform.
Crypto and usurpation
Usurpation, or a strategy that imitates a false order, is illegal, but for a young industry like crypto, history is full of such examples.
In 2014, when there was little or no regulatory surveillance, the majority of the commercial volume took place on Bitcoin exchanges only of retail merchants and cypherpunks, opening the industry to such practices.
During the ICO phase of 2017, when the volume of trading skyrocketed, tactics such as the usurpation were also expected, because the institutions were always skeptical about the asset class. In 2017 and 2018, traders regularly set up nine -digit positions which they had no intention of filling, only to withdraw the order shortly after.
The founder of Bitmex, Arthur Hayes, said in a 2017 blog article that he had “found incredible” that the usurpation of the usurpation was illegal. He argued that if an intelligent merchant wanted to buy $ 1 billion in BTC, he would bluff a sales order of $ 1 billion to fill it.
However, since the 2021 bullish market, the cryptography market has experienced waves of institutional adoption, such as Coinbase (Coin) which becomes public, the strategy (formerly Microstrategy) went to Bitcoin and Blackrock launching negotiated stocks (ETF).
At the time of writing the time of writing, there are no such orders which indicate other attempts to usurpation, and attempts at usurpation seemed to have become less blatant. However, even with billions negotiated by Tradfi companies, examples of such a strategy still exist in many crypto exchanges, especially on low liquidity altcoins.
For example, last month, the exchange of Mexc cryptocurrency announced that it had rekindled in an increase in market manipulation. An internal survey revealed a 60% increase in attempts to handle the fourth quarter of 2024 to this first quarter of this year.
In February, a merchant manipulated the hyperliquid jelly market by deceiving a pricing oracle, and the activity of hyperliquid to the activity encountered skepticism and a rate of subsequent capital.
How does the crypto-market fight combat usurpation?
The burden finally lies in exchanges and regulators.
“Regulators should define the baseline,” Dr. Jan Philipp told Coindesk. “” [Regulators] should define what counts as manipulation, specify penalties and describe how platforms must react. “”
The regulators certainly tried to suppress these patterns. In 2020, the merchant Rogue Avi Eisenberg was found guilty of having manipulated the mango decentralized exchange markets in 2022, but the business was rare.
However, crypto exchanges must also “intensify their surveillance systems” and use circuit breakers while using stricter rating requirements to suppress market manipulation, said Philipp.
“Detail users will not remain if they continue to be in front, usurped and thrown away. If Crypto wants to exceed its casino phase, we need infrastructure that reward fair participation, not initiate games,” concluded Philipp.
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