ACT plummets, Wintermute exits: Who is paying for junk assets?
Author: Scof, ChainCatcher
Editor: TB, ChainCatcher
On April 1, multiple low market cap tokens collectively crashed on the Binance platform, with ACT plummeting by as much as 55%. This sudden drop triggered widespread discussion in the community and brought to light the deep-seated contradictions hidden beneath the surface of the crypto market.
The On-Chain Truth Behind the Crash ?
The market initially focused on the market maker Wintermute. On-chain data shows that before and after the crash, Wintermute gradually liquidated several altcoins, including ACT, DEXE, HIPPO, and KAVA, which were the hardest hit in this round of decline.
Although Wintermute's founder responded that the sell-off was to arbitrage price fluctuations in the AMM pool and that the actions occurred after the price volatility, not as an active market dump, the timeline of on-chain data indicates that the exit of these funds closely coincided with the crash.
As a leading market maker in the industry, Wintermute's basic profit model is to maintain liquidity and gain price spread through high-frequency market making and cross-market arbitrage. In a normal market, it provides buy and sell depth while stabilizing prices. However, in extreme market conditions, its strategy may shift to actively withdrawing liquidity or even liquidating positions for profit maximization due to risk control, which on the surface appears similar to "market dumping."
Binance's Risk Control Logic and Strategic Game
At the same time, Binance's contract adjustments became a core trigger for this event. At 15:32 on April 1, Binance announced that it would lower the maximum position limits for several USDT-denominated contracts, including ACT, starting at 18:30 that day. For ACT, the position limit was reduced from $4.5 million to $3.5 million. This means that all positions exceeding the new limit would be forcibly reduced or directly liquidated at market price.
It is worth noting that this was already the third adjustment of contract parameters for ACT within just four days.
On March 28, the leverage limit was reduced from 25x to 10x; on March 31, the maximum position was lowered from $9 million to $4.5 million; and on April 1, it was further reduced to $3.5 million. Such frequent adjustments are unusual, and combined with market data, it can be inferred that Binance may have sensed that unverified large holders had accumulated significant positions in the ACT contract, posing a risk of liquidation due to insufficient market depth.
This is also a common "bubble-popping" mechanism in contract risk control: by lowering limits to guide risky positions to clear, it avoids significant losses to the insurance fund during extreme market fluctuations. From subsequent data, it can be seen that the open interest in the ACT contract plummeted by 75% during the adjustment period, and Binance's insurance fund indeed suffered a loss of about $2 million.
However, this technical operation for risk prevention quickly evolved into a chain reaction in the extremely fragile Meme ecosystem.
The Responsibility Fog in Multiple Responses
The ACT project team also spoke out after the incident, stating that the price fluctuations were "completely out of control" and promised to release a post-event review report once the dust settled.
As the situation developed, multiple parties involved were trying to "clear" their responsibilities, but the truth may not be singular. Binance emphasized that the drop was caused by users selling $1.05 million worth of ACT in a short period; Wintermute stressed it was an arbitrage action rather than a market dump; users accused the exchange of not adequately communicating rule changes in advance, while the project team maintained a tactically calm response.
Regardless of which party is involved, the structural issues exposed by this sudden event are more worthy of attention. The most core contradiction in the crypto market currently is the opposition between the rapid collapse of worthless assets and the harm to user interests. The large presence of fast-food assets like Meme is essentially a game driven by emotions. They lack fundamental support but enter mainstream trading platforms through listing, hype, and community operations.
In the Era of De-Bubbling, Who is the Sacrificed Party?
As a leading matching platform, Binance is caught in a dilemma. On one hand, it must ensure systemic safety and prevent chain liquidations caused by low liquidity assets; on the other hand, it also bears the users' trading freedom and asset confidence. In certain extreme cases, its risk control actions can trigger price crashes, thereby harming user interests. This balancing act under dual pressure is the "role paradox" faced by platforms today.
The role of market makers is equally complex. They are both providers of market liquidity and the first players to retreat during extreme market conditions. When their strategies shift, ordinary investors often remain unaware and find themselves deeply trapped.
More realistically, when worthless assets are cleared, there will always be those who profit from the chaos—whether it's institutions that identify risks and withdraw early or strategy accounts that arbitrage through volatility. De-bubbling and risk squeezing are essential phases of a healthy market, but when this mechanism lacks transparency, it can lead to a crisis of trust.
Ultimately, this ACT incident is not just a crash of assets but a mirror reflecting the deep institutional dilemmas in the current crypto market.
In a rapidly evolving market, platforms, project teams, market makers, and users are not isolated roles; the stability of the system depends on the dynamic balance among all parties. Without sufficient mechanisms to coordinate the tensions between "value" and "liquidity," "clearing" and "protection," any small-scale risk control operation could evolve into a systemic trust collapse.
And in the end, every participant in the market will bear the costs.