PAXG double kill for both long and short with Long Wick Candle! Gold-backed Token big dump of 22%, investors call for regulatory intervention.

On October 11, the gold-backed token PAXG (Pax Gold) plummeted from $3,950 to $3,087 in an instant, triggering a massive liquidation wave. Six days later, PAXG experienced another reverse long wick candle, with prices briefly surpassing $4,800, leading to short order get liquidated of $5.54 million. The community questioned the platform's manipulation suspicions and called for the New York State Financial Service to intervene and investigate the issuer Paxos.

October 11 Flash Crash: Gold Market Closed PAXG big dump 22%

On October 11, 2025, the price of PAXG, which was originally stable and linked to the spot gold, suddenly fell from about $3,950 on the BNB platform to $3,087, a drop of up to 22%. On the same day, its volatility reached as high as 31.65%, far exceeding the usual daily fluctuation range of about 2% for gold. At this time, it was the weekend, and the international gold market was closed, so PAXG's price should have remained stable.

The design logic of PAXG is that each Token represents one troy ounce of LBMA certified physical gold, held by Paxos Trust Company. This 1:1 pegging mechanism means that the price of PAXG should closely follow the spot gold price, with fluctuations not exceeding that of gold itself. However, against the backdrop of weak trading depth on the BNB platform (with daily trading volume below 10 million USD), large-scale liquidation of leveraged trading positions has occurred.

Multiple users have posted complaints on X (formerly Twitter) about their losses, including a trader named @ChaoAzen, who stated that his $10,000 position was completely liquidated within minutes, without any warning. Even more perplexing is that the price of PAXG remained relatively stable on other major exchanges, with such drastic fluctuations occurring only on the BNB platform, raising suspicions in the market about a possible interface failure or manipulation on that platform.

BNB platform later announced that it would compensate users over 280 million USD, clarifying that the decoupling was not the main reason for the market big dump. However, this huge compensation actually confirmed the existence of technical issues or risk control flaws on the platform. For leveraged traders, the 280 million USD compensation may just be a drop in the bucket, as losses caused by liquidation are often the total principal of the position, not just the price difference.

Community Anger: Call for Regulatory Authorities to Intervene in Investigation

The victim community did not sit idly by. A user named @Rocky_Bitcoin initiated a call on X, urging everyone to contact the regulatory authority of PAXG issuer Paxos—the New York State Department of Financial Services (NYDFS), providing contact information including phone and official email (subpoenas@paxos.com), hoping to prompt official intervention in the investigation of this matter.

Many users in the comment section below the post expressed serious dissatisfaction with the transparency of the BNB platform and Paxos. @Maxandzero questioned: Given that the current price of gold has reached a historical high of $4,015 per ounce, why did PAXG plummet 31%? Is there suspicion of manipulation? This abnormal phenomenon challenges the fundamental logic of RWA (Real World Assets) tokens. If the price of the pegged asset rises, but the token price crashes, then what does the so-called “1:1 peg” actually mean?

The outside world once again recalls that Paxos was fined $500,000 by the NYDFS in 2023 due to “weak risk control mechanisms,” raising doubts about whether it fulfilled its regulatory responsibilities during this crisis. As a regulated trust company, Paxos should have established mechanisms to prevent the tokens it issues from experiencing such severe price deviations in the secondary market. However, based on this incident, Paxos seems to lack the monitoring and intervention capabilities for exchange liquidity risks.

Three Core Questions Raised by the Community:

Liquidity Manipulation: Why is the trading depth of PAXG on the BNB platform so weak? Are market makers deliberately canceling orders to create panic?

Price Deviation Mechanism: Why does Paxos not have a circuit breaker or trading halt mechanism to prevent severe price deviations from the gold spot?

Compensation Transparency: How is the $280 million compensation distributed? Is it enough to cover the actual losses of all victims?

October 17 Reverse Long Wick Candle: Short Order Suffered Heavy Losses

On October 17, news reported that around 6 AM Beijing time today, the BNB platform's PAXGUSDT perpetual contract briefly experienced a Long Wick Candle, with an increase of about 16%; at the same time, the PAXG spot on the BNB platform saw a Long Wick Candle with an upward movement exceeding 8%, with the price once reaching $4,790, and now reported at $4,386.53. In addition, Coingecko data shows that PAXG experienced similar Long Wick Candle situations on other mainstream platforms, even briefly breaking through $4,800.

Community analysis suggests that the upward long wick candle may be due to a Get Liquidated of some short order traders on the BNB platform, where the U-based contract trading pair had a maximum upward long wick candle of 15.8%, reaching $5,106. According to Coinglass data, there were $6.82 million in liquidations for PAXG across the network in the past 4 hours, including $1.279 million for long orders and $5.5453 million for short orders.

This reverse long wick candle forms a perfect long and short kill combination with the big dump on October 11. The bulls that survived after the dump on the 11th have already been liquidated, while the traders who shorted PAXG were harvested in the upward long wick candle on the 17th. This dual long wick candle pattern is not uncommon in the crypto market, but occurring on the RWA Token, which claims to be 1:1 pegged to physical gold, seems extremely bizarre.

What is even more concerning is that Binance has not yet responded to the incident. The BNB platform, which announced a $280 million compensation after the incident on the 11th, has remained silent regarding the reverse Long Wick Candle on the 17th, and this selective response has deepened market skepticism about the platform's transparency.

New Highs in Gold and PAXG Wounds: RWA Market Risk Exposure

Despite spot gold reaching a historical high in October, many PAXG investors have exited due to this liquidation event and are unable to participate in this rebound. This reveals the core paradox of the RWA Token market: the physical asset anchoring that should theoretically reduce volatility instead becomes a tool for amplifying volatility and manipulation risks in a liquidity-poor centralized exchange environment.

This flash crash has also exposed the risks of the “Real World Assets” (RWA) token market. Market experts and community opinion leaders are calling for regulatory bodies to strengthen regulations on the interaction between on-chain assets and centralized exchanges, and to improve the transparency of platform operations. The PAXG incident demonstrates that even tokens issued by regulated entities and backed by physical assets can still become victims of speculation and manipulation in a trading environment lacking sufficient liquidity and regulation.

For investors, the PAXG incident provided a harsh lesson: do not equate RWA Tokens with the physical assets they are pegged to. When engaging in leveraged trading on centralized platforms, you are faced not only with the risks of the assets themselves but also with platform liquidity risks, technical failure risks, and potential manipulation risks. When these risks erupt simultaneously, the so-called “gold peg” becomes meaningless.