Binance, 'ACT' Plunges 50% Amid Leverage Adjustment Aftermath

# Binance Adjusts Futures Leverage and Margin Terms, Triggering Sharp Declines in Related Tokens Binance's recent adjustment to its leverage and margin requirements for perpetual futures contracts has sparked a wave of sell-offs in associated tokens, sending shockwaves through the market. On November 1, Binance announced changes to the leverage and margin conditions for specific perpetual futures contracts. The impacted trading pairs include △1000SATSUSDT △ACTUSDT △PNUTUSDT △NEOUSDT △NEOUSDC △TURBOUSDT △MEWUSDT, among others. Following the announcement, Act I: The AI Prophecy (ACT), a meme token on the Solana blockchain, plummeted by over 50% within 30 minutes. A major investor holding substantial positions in ACT faced forced liquidation worth approximately $3.79 million as the token's price plunged to $0.1877. This triggered a cascading wave of selling pressure, driving ACT's price even lower. Other tokens, such as dForce(DF) and DeXe(DEXE), also suffered significant losses, declining by 16% and 23%, respectively. # Market Reaction to Leverage & Margin Adjustments Industry analysts suggest that the combination of structural changes to leverage terms and subsequent market reactions exacerbated the sell-off. Previously, traders could apply leverage up to 10x depending on their position size. However, the new adjustments have significantly increased the maintenance margin requirements, curbing the use of leverage. Larger positions now face margin requirements as high as 50%, significantly increasing the financial strain on high-stakes investors. Consequently, the scope for utilizing leverage has narrowed, leading to reduced liquidity in the markets. The downturn was further exacerbated by a surge in large sell orders and a spike in spot trading volume. # Wintermute’s Involvement Under Scrutiny Speculation emerged that market maker Wintermute was behind the sell-off. However, Evgeny Gaevoy, CEO of Wintermute, denied allegations of deliberate involvement, stating, “We were merely responding to market dynamics and did not intentionally initiate any sell orders.” # Concerns Surrounding Immediate Implementation The policy adjustments were implemented immediately following Binance’s announcement, leaving investors with no time to react or mitigate risks. This prompted a series of forced liquidations on pre-existing positions, fueling concerns about the exchange's operational transparency. Benson Sun, former community manager of FTX, criticized the immediate enforcement, saying, “Policies applied without prior notice can cause significant harm to investors. Impact assessments and advance warnings should be standard practice.” The abrupt changes not only triggered significant financial losses for investors but also raised questions about investor confidence in Binance’s operational decision-making and its approach to risk management.