Market buy on thin Binance order book costs inexperienced trader $400,000

Published on by Cryptoslate | Published on

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An anonymous user reportedly lost $400,000 paying over 17,000 times the market price of a token by pressing "Market Buy" on Binance.

A Reddit user recounts the tale of $400,000 lost on Binance.

A Reddit user by the name of Diethxbye recounted a story of how his friend allegedly lost over $400,000 in a trade gone wrong on Binance.

According to the post, which has since been removed from Reddit, an unnamed user purchased $500,000 worth of Paxos stablecoins on their exchange and transferred them to Binance.

The funds were deposited to his Binance account on May 6th, after which the user intended to buy the same amount of Chainlink tokens.

The user reportedly had very little understanding of how cryptocurrency exchanges work and didn't know how to look at live order books, a list of outstanding buy and sell orders.

In order to speed up the transaction, the user pressed "Market buy" with $500,000 worth of Paxos stablecoins on the Paxos/Chainlink order book that normally only sees $10,000 worth of transactions in a 24 hour period.

"Needless to say, this was a very poor decision, and he cleaned out the entire order book and spiked the price of Chainlink, which has a market price of about $0.58 all the way to $9,999."

After cleaning out the entire order book, the user that caused the price of Chainlink to appreciate 17,000 times its trading price.

As Binance acted as a mediator in the exchange of the funds, all of the coins went directly to traders and cannot be refunded to the user that accidentally made the trade.

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