According to the former employee of Alameda Research, Sam Bankman-Fried’s company, which was in bankruptcy, was responsible for a glitch that caused a drastic drop of Bitcoin’s price on Binance.US in 2021.
The event occurred on October 12 when the price of Bitcoin on the exchange plummeted from $65,700 to $8,200 in just one minute before quickly returning to its previous value.
While Binance.US claimed it was a software error from one of its institutional clients, some traders were skeptical of this explanation and suspected a manual entry error.
Bhardwaj, a former programmer at Alameda, confirmed these doubts and revealed that the firm’s operations were mostly automated, with traders setting up algorithms for their trades.
However, there were certain situations when trades were executed manually, which could lead to errors. Bhardwaj noted that while algorithmic software at Alameda was regularly checked, this was not the case with manual trading, which could have led to the error that caused the drastic price drop on Binance.US.
