Binance.US blames bitcoin flash crash to $8,200 on a bug in a client's trading algorithm

Quick Take

  • Binance.US blamed a flash crash on its venue on an institutional client’s trading algorithm.
  • But traders say they’re surprised there weren’t better systems in place.

Earlier today, the price of bitcoin suffered a flash crash to $8,200 on crypto exchange Binance.US — falling 88% in a matter of seconds.

In an email to The Block, Binance.US said the flash crash was tied to a bug in the trading software of one of its clients. "One of our institutional traders indicated to us that they had a bug in their trading algorithm," the firm said. 

The trading firm, according to Binance.US, has fixed the issue. "We are continuing to look into the event, but understand from the trader that they have now fixed their bug and that the issue appears to have been resolved," the firm said. 

Trader sources The Block spoke to expressed surprise at the event. They said typically trading firms have systems in place to avoid this kind of issue. Those systems lockdown when certain conditions are met, such as when too much money is lost on a trade or when the price used in a trade is too far from the best price. 

Exchanges also typically have this kind of system in place. Coinbase, for instance, implemented so-called price protection points. If an order tries to fill outside of certain parameters, it will be canceled by the engine. 

THE SCOOP

Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy

"If a Market or Limit Order would fill against Orders beyond the PPP, the Order will partially fill up to the PPP level and the matching engine will cancel all remaining portions of the Order," according to its website. Bitcoin did not crash on Coinbase. 

The flash crash on Binance.US had an impact on the price of bitcoin across the wider market. On other major exchanges, the price initially fell from around $65,500 to $64,200. Despite a slight recovery, it failed to return to pre-crash highs and has continued to slide, sitting at $63,100 at time of publication. Elsewhere, bitcoin fell to $58,555 while it was trading even lower on FTX.US at $51,410. 

For more breaking stories like this, make sure to follow The Block on Twitter.


© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Authors

Tim is the Editor-In-Chief of The Block. Prior to joining The Block, Tim was a news editor at Decrypt. He has earned a bachelor's degree in philosophy from the University of York and studied news journalism at Press Association Training. Follow him on X @Timccopeland.
Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].