A number of altcoins and memecoins saw a sharp sell-off on April Fools’ Day

A number of altcoins and memecoins saw a sharp sell-off on April Fools’ Day, April 1, with some tokens, including Act I The AI Prophecy, dropping nearly 60% in minutes.

Several altcoins and memecoins experienced a sharp sell-off on April 1, with Act I The AI Prophecy (ACT) dropping 58% in less than an hour.

The massive decline of ACT, which went from $0.19 to $0.08, also saw a $96 million decrease in market cap, according to CoinMarketCap.

The sharp decrease in ACT came amid notable red action in the altcoin market, with memecoins like Hippo (HIPPO), CZ’S Dog (BROCCOLI), Kishu Inu (KISHU), DeXe (DEXE), dForce (DF) and more seeing significant price declines.

The broader crypto market did not react negatively to the panic in altcoin markets, with major cryptocurrencies like Bitcoin (BTC) remaining green at the time of writing.

The massive drop in the ACT token also did not go unnoticed on social media, with Act I taking to X to assure its community that the project is fully aware of the current situation.

“Our team is actively investigating and working collaboratively with all relevant parties to address this matter,” Act I wrote, adding that it also started developing a “response plan” with its trusted partners.

Some crypto commentators linked the sudden price movement to a margin update by Binance.

According to data from the blockchain analytics tool Lookonchain, Binance’s update of leverage and margin tiers on tokens like ACT on April 1 has triggered some massive liquidations among whales.

“Binance updated leverage and margin tiers on tokens like ACT — and a whale got liquidated for $3.79M at $0.1877,” Lookonchain said in an X post.

According to a blog post by Binance, its derivatives platform, Binance Futures, updated to leverage and margin tiers for pairs such as ACT versus Tether USDt (USDT) at 10:30 UTC.

The update affected existing positions opened before the update, potentially leading to some position expirations, Binance noted.

The altcoin bleeding also came amid community speculation surrounding selling by the global algorithmic trading firm Wintermute, which reportedly liquidated multiple altcoin positions on April 1.

Some market observers suggested that the selling was due to a hack, while many expressed confusion over possible reasons for the selling’s root cause.

“MMs don’t just nuke their own books for fun. Either it’s a hack, insolvency, or someone is getting margin called hard,” DEFI Kadic commented.

Some also speculated about Wintermute interacting with the USD1 stablecoin by Donald Trump-linked World Liberty Financial.

“That being a major deal for them, they are derisking all assets that might be non-compliant or non-matching the new brand direction they are taking of an institutional player,” the X user claimed.

Wintermute co-founder and CEO Evgeny Gaevoy later denied the company’s involvement in the altcoin massacre on April 1 in a social media exchange with X user ilikeblocks.

“Not us [for what it’s worth], but also curious about that post mortem,” Gaevoy wrote.

Ilikeblocks later posted to express regret for their initial allegation about Wintermute.

“They’re making markets better for all of us and in comparison to their competition they’re really not that shady,” they added.

Cointelegraph contacted Wintermute for comment regarding the market action but did not receive a response by the time of publication.