Crypto.com CEO Demands Regulatory Scrutiny Following Massive Crypto Liquidations

Call for Regulatory Action

In the wake of a staggering $20 billion in cryptocurrency liquidations within a single day, Kris Marszalek, CEO of Crypto.com, has called for a comprehensive regulatory investigation into the exchanges that suffered the most significant losses. Marszalek took to the social media platform X on Saturday to voice his concerns, urging regulators to scrutinize the fairness of these exchanges' practices. He questioned whether these platforms had slowed down operations, mispriced assets, or failed to uphold robust anti-manipulation and compliance controls during the market crash. Marszalek's call to action comes as data reveals the extent of the liquidations across various exchanges. According to CoinGlass, Hyperliquid led the pack, recording a staggering $10.31 billion in liquidated positions. Bybit followed with $4.65 billion, while Binance reported $2.41 billion in losses. Other significant players like OKX, HTX, and Gate experienced smaller, yet substantial, liquidation totals of $1.21 billion, $362.5 million, and $264.5 million, respectively. Marszalek’s pointed inquiries highlight the need for transparency and accountability in the rapidly evolving crypto market.

Exchange Responses and User Concerns

In response to the turmoil, Binance issued a statement acknowledging a price depeg incident involving Ethena’s USDe (USDE), BNSOL, and WBETH, which led to forced liquidations for some users. The exchange confirmed it is reviewing affected accounts and considering "appropriate compensation measures." This announcement followed reports from users who claimed to have incurred losses due to platform errors. One Binance trader alleged that the exchange fully closed their short position while leaving their long position open, resulting in a total loss. This user emphasized that the issue was not related to auto-deleveraging (ADL) and noted that similar trades on other platforms survived the crash. Yi He, co-founder of Binance, addressed user complaints with a public apology, attributing the issues to "significant market fluctuations and a substantial influx of users." She assured that Binance would compensate verified cases where platform errors caused losses but clarified that losses from market fluctuations and unrealized profits would not be eligible for compensation. The exchange's response underscores the challenges faced by major platforms in maintaining operational integrity during periods of extreme market volatility.

Historical Context and Market Impact

The recent crypto market wipeout has been described as unprecedented, surpassing previous downturns in the industry. According to crypto analyst Quinten François, the $19.31 billion in liquidations far exceeds the losses experienced during the COVID-19 crash, which amounted to $1.2 billion, and the FTX collapse, which saw $1.6 billion in liquidations. This latest market upheaval underscores the volatility inherent in the cryptocurrency sector and the potential for significant financial repercussions. The catalyst for this market meltdown was U.S. President Donald Trump's announcement of plans to impose 100% tariffs on all Chinese imports starting November 1. This decision was in response to China's new export restrictions on rare earth minerals, which are critical components in various technologies. China, responsible for approximately 70% of the global supply of these minerals, declared that any product containing more than 0.1% Chinese rare earths would require an export license, effective December 1. Trump's criticism of Beijing's policy as "a moral disgrace" and his hint at canceling a planned meeting with President Xi Jinping at the upcoming APEC summit have further fueled market uncertainty.

Broader Implications for the Crypto Industry

The recent events highlight the interconnectedness of global economic policies and the cryptocurrency market. The imposition of tariffs and the resulting geopolitical tensions have a direct impact on investor sentiment and market stability. As the crypto industry continues to mature, the need for regulatory oversight and robust risk management practices becomes increasingly apparent. Marszalek's call for regulatory scrutiny reflects a growing consensus among industry leaders that transparency and accountability are essential to fostering trust and stability in the market. As exchanges and regulators grapple with the fallout from this latest market disruption, the focus will likely shift towards implementing measures to prevent similar occurrences in the future. This may include enhancing technological infrastructure, improving compliance protocols, and fostering greater collaboration between industry stakeholders and regulatory bodies. The crypto market's resilience will be tested as it navigates these challenges, but the lessons learned from this episode could pave the way for a more secure and transparent financial ecosystem.