Binance responds to the CYBER incident of cutting leeks, community opinion: Binance should not tolerate market manipulation

CYBER obviously intervened as a market maker, causing a sharp rise in the market in a headwind situation without major news; the market maker and CyberConnect easily manipulated the market, resulting in losses for many traders. Binance, as the largest liquidity market exchange, also faced criticism from the community for promoting chip control and suspected plate smashing arbitrage. Binance issued an announcement today to explain.

Understanding the background of the event:

$CYBER surged 150% in two days! Upbit holds 33% of the circulation, and market maker DWF operates?

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After a 354% surge, $CYBER: Upbit premium, mistaken proposal, market manipulation, how should investors respond?

Binance Responds to CYBER Incident of Harvesting

In the announcement, a large part of it explains why some people at Binance have heavily shorted CYBER.

The following excerpt is from the Binance announcement:

Why did the CYBER withdrawal limit issue occur?

Starting from August 29, CYBER saw continuous significant price increases for several days, with the price rising from 3.6 USDT to 16 USDT on September 1. The unstable market conditions led to CYBER experiencing a premium in the futures market, with an increase in the futures funding rate, resulting in a sharp increase in the demand for borrowing CYBER.

Many users wanted to withdraw CYBER that they had sold, but due to poor market liquidity, borrowing users were unable to repurchase CYBER for repayment in a short period of time. In order to protect users' withdrawal rights, Binance implemented withdrawal limits on CYBER.

Does Binance engage in market manipulation for arbitrage purposes?

Binance does not use users' funds for any trading or investment for profit. The range of borrowing is limited to other Binance users for the tokens deposited by users.

The main operation of the Earn product is to collect tokens and then lend these tokens to leverage borrowing users and collateralized borrowing users.

How did the platform respond to the CYBER incident?

• The system will automatically increase the borrowing interest rate to prompt borrowing users to repay as soon as possible.
• The system will automatically increase the current Earn annual percentage rate (APR) based on market liquidity to attract depositors.
• Timely adjustment of individual withdrawal limits for CYBER Earn to protect the withdrawal rights of the majority of customers.

Community Questions: Who could have predicted the significant rise and borrowed heavily against CYBER on Binance?

@Loki_Zeng believes that CYBER was heavily shorted two days before the pump. Which "ordinary arbitrage user" could predict a 30% premium in the futures market two days later? Loki later deleted the original post after the Binance announcement and stated:

I find Binance's announcement to be more credible. It's more vague about the "malicious borrowing by market makers." If they could directly state whether "market makers" have borrowed excessively, it would help clarify the truth of the matter.