Larry Cermak, Head of Research at The Block crypto news outlet tweeted yesterday that Binance has been disabling short orders when bad news comes out. Changpeng Zhao, CEO of Binance recently pledged to start a fund against FUD, news that causes “Fear, Uncertainty, and Doubt.” The allegations have been confirmed by other users, but there are still some descending opinions and there has not been a formal response from Binance.
“Binance has recently started disabling shorting on margin when bad news. about certain projects comes out. They’ve done this for Matic and Vechain. But going long on margin is still allowed and never disabled if good news comes out.” – Larry Cermak
Because this allegation follows the biggest altcoin crash in recent history, MATIC/BTC, it’s easy to believe that the exchange is going to extreme circumstances to make sure it doesn’t happen again. Zhao blamed the crash on bag holders panicking while others blamed it on malpractice from the coin’s founders.
“A number of big traders panicked, causing a cycle. Going to be a tough call on how much an exchange should interfere with people’s trading.” – Changpeng Zhao
The Binance exchange where coins like MATIC are listed is not a derivatives exchange, so when traders short, there actually needs to be coins to borrow. This is one of the top arguments against the idea of Binance not allowing short orders during times where there is bad news. Still, if this is the case, it would be nice to have a count of the borrowing supply.
Zhao is a fan of Bitcoin, so it will be more obvious if they are trying to manipulate the market in favor of bulls if they ever decide to turn off shorting of Bitcoin during bad news. There surely will always be an excess of those to borrow.