With accelerated adoption worldwide, Binance is engaging increasingly more users and we are aware we have a larger role in protecting them.
Binance says on the blog: We are the first cryptocurrency exchange with a Responsible Trading program, dedicating resources to further educate users on the risks of trading and implementing safety measures such as anti-addiction restrictions and “cooling-off” suspension features. We want to give a reminder that the crypto market is risky and all users must exercise caution and self-assessment if they wish to participate. Newer and inexperienced users should take extra care and adopt responsible trading practices. This is why we require users to take compulsory quizzes and complete training videos when users sign-up for futures trading.
We recently learnt of a few users who publicly claimed to have been impacted during a market-wide outage on May 19. Our platform system logs our users’ activities, including unsuccessful attempts to log-on or place an order, so we investigated their cases but could not identify any relevant technical or system issues that impacted their trading. We want to take this opportunity to illustrate how users should exercise Responsible Trading with three case studies.
Three Case Studies for Responsible Trading
Before we get into them, we should note that based on account activity, we have observed that in all the three cases, the user had previously made profits during the bull market. This is often a sign that a user has started to assume they will always be on a winning streak and neglect the inherent risk in all trading activities.
In the first case, system logs showed the user was not online when the market started to move against the open positions on May 19. We did not find any records of the user attempting to log on to close the user’s positions and the user also had not taken preventive measures, for instance using our Take Profit / Stop Loss features to set predetermined execution prices and minimize their exposure. It is important to emphasize that past performance is not indicative of future results and we advise all users to actively monitor their accounts when they have open trading positions, regardless of their prior trading experiences, so that they can make informed decisions, especially in the volatile crypto market.
In another case, a user had accumulated a large position and was actively using our app on May 19. Our system records indicate the user logged on a few minutes before the positions were liquidated, and had successfully placed a number of sell orders. This shows the user was not affected by any system issues and could operate the app normally. Generally speaking, users must be mindful that a large position bears higher risk as it takes a relatively longer time to exit the positions. Due to the large size of the user’s open position, there were remaining trades liquidated when the market rapidly moved against them before they could be executed.
In the third case, a user complained to us that our mobile app was not functioning properly and was unable to close positions. We reviewed the case and our system logs showed the user was on our app and was able to operate and use our app normally. It was also alleged that system delays affected the ability to fund the account and the positions were liquidated as a result. We looked into the matter and found that our deposit and funding transfer features were also functioning as usual. Users should not rely on last-minute deposits and transfers due to market volatility. It was also made known that the user intended to support his financial needs through the crypto market. In our guides and communications materials, we strongly advise our users to only trade within their means and never use funds they cannot afford to go without.
Responsible Trading as a Foundation for Sustainability
The exponential growth of cryptocurrencies can pose technical bottlenecks for exchanges due to real-time market fluctuations that come with periods of high trading volume. Inevitably all major crypto exchanges will encounter system pressures due to market volatility and despite our best efforts, we are no exception and cannot guarantee 100% system stability all the time. Where our users have experienced actual trading losses due to our systems issues, we will offer compensation, and we continue to invest into improving our platform stability.
As a market leader, our customer support team receives a high volume of user queries and works very hard to address any concerns fairly and in the quickest time possible. The team encounters unreasonable demands periodically, and in some cases, abusive or coercive behavior. Though regrettable, these moments strengthen our commitment to provide a conducive and safe environment for the community.
Our policy has been to protect our users so where they experienced actual trading losses due to our systems issues, we will offer compensation. But we do not accede to unreasonable demands for “what could have been” hypothetical scenarios. Accepting such demands will enable widespread abuse against all exchanges and harm our ecosystem’s development. As such, we do not compensate users for what is known as “potential profits” where the user is unable to demonstrate that he or she had actually tried to close an open position. Also, when facing threats and scrutiny, we believe all the more we should be consistent in rejecting bad and extortive behavior in order to protect a fair playing field for the vast majority of users who are responsible traders.
Binance will continue to invest efforts and resources into both technology hardware and community “software”. While we continue to build more tools and products, we are also launching a social campaign for the community from now until the end of the month to further promote our Responsible Trading program. We are encouraging our users to share what they understand by responsible trading to help create greater awareness to other users. We hope you will join us in this meaningful journey.
As regulatory frameworks for our young crypto industry continue to shape up around the world, Binance is taking concrete steps in our commitment to compliance and working with regulators to protect users, encourage innovation, and build a fair and sustainable industry.
