CZ Clarifies: The BTC/USD1 trading pair "flash crash" was caused by low liquidity, leading to a momentary price fluctuation, with no liquidation occurring

On December 26th, Catherine—Solv Protocol’s Business Development Lead—announced the following: Binance partnered with USD1 to launch a 20% fixed annual yield deposit promotion. A wave of users swapped USDT for USD1, pushing the stablecoin to a brief ~0.39% premium. Some capital was then lent out via the Lista DAO lending market: borrowers used SolvBTC or SolvBTC-BTCB as collateral to take out USD1, then gradually sold it on spot markets to meet demand. Some traders executed market orders to sell BTC against USD1 directly. However, due to the thin liquidity of this trading pair, a large market sell order quickly wiped out the buy side, temporarily driving BTC prices down—before arbitrage bots swiftly bought back in to restore levels. CZ later clarified on the incident: “This actually shows the exchange didn’t participate in any related trades. Since this is a newly listed pair with low liquidity, a large market order can easily cause a temporary price swing—but arbitrageurs quickly correct it back to normal. Also, the pair wasn’t included in any indices, so no liquidations were triggered.”