Bitcoin Exchange

Binance 125X Leverage Sparks Criticism From Community

Anatol Antonovici | Oct 18, 2019 | 12:00

---

Crypto exchange Binance announced that its recently launched futures trading platform would offer BTC/USDT contracts with up to 125:1 leverage.

Use With Caution

Starting from today, Binance Futures allows investors to trade with up to 125x margin and pick any leverage from 125:1 to 1:1 for BTC/USDT contracts. When using the highest possible leverage, a 100 USDT deposit would enable users to hold 12,500 USDT in BTC.

Binance CEO Changpeng Zhao (CZ), explained:

The performance of the Binance Futures systems far outstrips many other platforms in the market, giving users a smooth trading experience. The market has been demanding a product with superior stability and performance; now we are providing one.

CZ said via his Twitter profile that the high-risk trading option is not recommended for beginners.

Use high leverage with extreme caution. Dont recommend it for new traders. https://t.co/vstV0Lusf2

— CZ Binance (@cz_binance) October 18, 2019

Binance claims that it is using a sophisticated risk engine and liquidation model for the high-leverage trades.

Despite this, most of the commentators criticized the addition, hinting that Binance has become a platform for gamblers. Indeed, given the insane volatility of cryptocurrencies, including Bitcoin, a 125x leverage could wipe any position within seconds. For most commentators, “125x and caution are not synonymous.”

Is Binance Trying to Deprive Traders of Crypto Funds in a Nice Way?

The crypto community suspects Binance of introducing the high-risk service for its own profit at the expense of ignorant traders. Indeed, the crypto exchange has been mostly about profits. In the last three years, CZ’s platform has generated more than $1 billion in cumulative profit or more than $1.2 million in profits every single day.

Binance has made $1 billion in cumulative profit in less than 3 years since inception??

Damn @cz_binance slow down and leave some of the profits for everyone else!!

🏎💨✌🏽

— Pomp 🌪 (@APompliano) October 17, 2019

Here are the profit figures by different periods:

I made some cool #Binance stats based on historical data:

Avg Quarterly burn: 1.614M $BNB
Avg Amount burned: $22.97M
Avg Quarterly profit: $114.87M
Avg Monthly profit: $38.29M
Avg Weekly profit: $8.84M
Avg Daily profit: $1.26M

Impressive! pic.twitter.com/ChVPSTipv0

— CryptosBatman ⚡ (@CryptosBatman) October 17, 2019

While Binance has been playing nice so far, the astronomic leverage seems to be an excessive effort to monetize traders’ vulnerabilities.

New toy to steal money from noobs 😂😂😂😂😂

— Mat Bas (@MatBas_no1) October 18, 2019

Ironically, the maximum leverage is aimed at advanced traders, but they would be the last ones to go for such a crazy deal.

On the other side, CZ reacted by saying Binance was offering multiple features and it was the responsibility of traders to choose what they like:

Not every feature is for everyone.  Some features, while not liked by everyone, are in high demand only for small selected groups.  Please don’t use features you don’t like or need.  As a platform, we have to provide choices to stay competitive.

5 Funniest Reactions on CZ’s Tweet

To end this story on a positive note, here are the most hilarious comments on CZ’s announcement:

#1

Better chances… pic.twitter.com/iAHw5gEaNS

— CountCryptula (@cCryptula) October 18, 2019

#2

REKT-as a service 😂

— Charles H (@CharlesSWE) October 18, 2019

#3

You blink you get liquidated 😂

— Virgo Crypto (@CryptoVirgo) October 18, 2019

#4

Its pure gambling. When do you apply for a gambling license?

— CryptoRomulus 🔜🌕 (@CryptoRomulus) October 18, 2019

#5

Satoshi whitepaper page 2 :
– "When you lost 90% of a x5 trade on a silly wick coming from nowhere, you can still bet the remaining 10% on a x125 and get a Lambo in the next hour!" pic.twitter.com/jGIDGNYPvX

— ᗩᒪᎧTTᗩ ᗰᎧᑎEY ❂ (@money_alotta) October 18, 2019

Let us know which reaction do you like the most!

Images via Shutterstock, Twitter: @cz_binance, @APlompliano, @CryptosBatman, @cCryptula, @money_alotta, @CryptoVirgo, @CharlesSWE, @CryptoRomulus