Crypto.com CEO Demands Probe Into $37B Exchange Liquidations

In a direct call to action on social media platform X, Crypto.com CEO Kris Marszalek identified the ten exchanges that require immediate regulatory examination based on their staggering liquidation volumes during the market crash. Hyperliquid topped the list with an astonishing $19.35 billion in liquidations, followed by Bybit at $10.31 billion and Binance with $4.5 billion. The top five exchanges alone accounted for over $37 billion in liquidations within a 24-hour period, a figure that underscores the massive scale of investor losses during the market turmoil.

The complete list of exchanges Marszalek flagged for investigation includes OKX, HTX, Gate, CoinEx, Bitfinex, and Bitmex, all of which recorded significant liquidation volumes. Marszalek emphasized that regulators need to conduct a thorough review of the fairness of practices at these platforms, noting that $20 billion in liquidations meant many users suffered substantial financial harm. His call to action specifically referenced the fundamental role of regulatory bodies in protecting consumers and ensuring market integrity during periods of extreme volatility.

Marszalek outlined several critical areas where regulators should focus their investigative efforts. First and foremost, authorities should determine whether any exchanges faltered operationally to the point where investors could not execute trades during the market crash. This operational stability question is particularly relevant given numerous user complaints about platforms becoming inaccessible or unresponsive during peak volatility periods.

Another crucial investigation point involves whether exchanges priced all trades correctly and in line with established market indexes. Marszalek also highlighted the need to examine exchanges’ trade monitoring systems and anti-money laundering programs, which are essential for maintaining market integrity. Perhaps most significantly, he questioned whether internal trading teams at these exchanges maintain proper Chinese-wall protocols to prevent conflicts of interest between exchange operations and proprietary trading activities.

The Crypto.com CEO’s comprehensive framework for investigation reflects growing concerns about whether some exchanges may have prioritized their own profitability over customer protection during the market crash. His statement that regulators need to assure market integrity suggests that current practices at some platforms may be undermining confidence in the broader cryptocurrency ecosystem.

Simultaneous with Marszalek’s regulatory call, numerous cryptocurrency investors took to social media to detail their experiences during the market crash. Binance users reported particularly severe issues, with many alleging they were unable to execute trades, access their accounts, or utilize critical risk management tools like stop-loss functions. One investor using the pseudonym ‘Cowboy’ described Binance as the biggest scammers in crypto, claiming the exchange froze users out of their accounts during the crash and prevented access to funds.

According to Cowboy, the unavailability of limit orders and stop-loss functions ensured that Binance maximized profits during what he called the largest liquidation event in history. He alleged that by blocking users from managing their positions or longing the bottom, Binance effectively transformed a market meltdown into their own profit machine. The user went so far as to suggest that Binance CEO Richard Teng could face prison time for the exchange’s alleged malpractices.

Another user, ElonTrades, provided technical analysis of how bad actors allegedly exploited a flaw in Binance’s pricing structure. According to their investigation, Binance valued assets including USDe, BNSOL, and WBETH based on its own order books rather than external oracles. When exploiters dumped approximately $60 million worth of USDe on Binance, it caused the stablecoin to artificially depeg on the exchange, triggering hundreds of millions of dollars in forced liquidations for traders who had used the token as collateral.

ElonTrades characterized the event as a coordinated exploitation of Binance’s internal pricing system, amplified by macroeconomic shocks and systemic leverage across the cryptocurrency markets. This analysis suggests that the massive liquidations weren’t merely the result of market forces but potentially involved manipulation of exchange-specific pricing mechanisms.

In response to the widespread complaints, Binance acknowledged experiencing platform-related issues that impacted users during the market crash. The exchange committed to compensating affected users, with CEO Richard Teng noting that Binance would learn from what happened and remain committed to improving their services. Binance co-founder Yi He emphasized that the exchange never shies away from problems and takes responsibility when they fall short, stating there are no excuses or justifications for platform failures.

The events surrounding Saturday’s crash and the subsequent call for investigations highlight fundamental questions about exchange reliability during periods of extreme market stress. With Hyperliquid’s $19.35 billion in liquidations representing nearly half of the total among the top ten exchanges, and Binance users reporting significant accessibility issues, the incident raises concerns about whether current exchange infrastructure and practices are adequate to handle market-wide volatility.

Marszalek’s demand for regulatory scrutiny represents a significant moment for the cryptocurrency industry, as it comes from within the exchange ecosystem itself. His call suggests that even industry leaders recognize the need for greater oversight to maintain market integrity and protect consumers. The outcome of any potential investigations could have far-reaching implications for how exchanges operate during volatile periods and what safeguards are implemented to prevent similar situations in the future.