Binance 125X Leverage Sparks Criticism From Community

Binance 125x Leverage Criticism

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.

https://twitter.com/cz_binance/status/1185137561070522368

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.

Here are the profit figures by different periods:

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

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

#2

#3

#4

#5

https://twitter.com/money_alotta/status/1185144551146708992

Let us know which reaction do you like the most!


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

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