It’s Sunday.
This week, crypto markets sold off again. But strangely, the debate has shifted back to the October 10 crash.
Why now? Because Binance released a detailed statement explaining what happened that day — and not everyone agrees with it.
Some traders believe Binance is simply covering its own tracks. Others say the crash was unavoidable and purely macro-driven.
Even though it has been three months, understanding the Binance 10/10 event still matters. It helps explain how liquidation cascades happen, how leverage behaves under stress, and what risks traders face in the future.
Today, we look at both sides of the argument and share our honest take.
The October 10 Flash Crash According to Binance
Binance describes October 10 as a market-wide flash crash caused by macroeconomic stress, excessive leverage, and liquidity evaporation.
According to the exchange, its core systems remained fully operational during the event. There was no matching engine failure, no clearing disruption, and no platform-wide downtime.
Binance does acknowledge that two platform-specific issues occurred. However, it strongly states that these issues did not cause the crash itself.
From Binance’s perspective, the crash began with a macro shock tied to global trade-war headlines. Risk assets sold off across the board. Crypto, which had rallied for months and carried heavy leverage, was especially vulnerable.
The Macro Setup Before 10/10
Leading into October 10, leverage across crypto derivatives was near record highs.
Bitcoin futures and options open interest exceeded $100 billion. On-chain data showed that most Bitcoin holders were sitting on large unrealized profits.
In simple terms, the market was crowded, overleveraged, and complacent.
When the macro headlines hit, forced deleveraging kicked in almost immediately.
This was not limited to crypto. U.S. equity markets lost roughly $1.5 trillion in value that same day. The S&P 500 and Nasdaq both recorded their largest single-day drops in six months.
Liquidity Vanished as Market Makers Pulled Back
As prices fell, market makers activated automated risk controls. These systems are designed to reduce exposure during extreme volatility.
While expected, this behavior temporarily drained liquidity from order books.
According to Kaiko data referenced by Binance, BTC liquidity dropped to near zero on many exchanges within a 4% price range. Only a few major venues retained meaningful bid depth.
In thin conditions like this, every forced sell pushes prices further than normal. Arbitrage between exchanges also became unreliable, making price dislocations worse.
Ethereum Network Congestion Made Things Worse
At the same time, Ethereum network congestion spiked.
Gas fees jumped from single digits to over 100 gwei. Transaction confirmations slowed significantly.
This delayed arbitrage, slowed capital movement between platforms, and widened spreads. Liquidity could not be deployed where it was needed most.
In an already stressed market, this created a temporary liquidity vacuum that amplified price swings.
What Happened Across the Market
In thin markets, even modest orders can create extreme wicks.
Forced liquidations triggered more forced selling. Slower arbitrage widened price gaps. Some pegged and derivative tokens briefly decoupled from their reference values.
According to Binance, this was a systemic risk-off event driven by macro pressure and leverage reflexivity — not by a single exchange failure.
Binance’s Key Timeline Argument
Binance points to timing as its strongest defense.
The highest-volatility window occurred between 21:10 and 21:20 UTC. By that point, roughly 75% of the day’s liquidations had already taken place.
The widely reported depegging of USDe, WBETH, and BNSOL occurred later, around 21:36 UTC.
From Binance’s view, this confirms that the bulk of deleveraging happened before any platform-specific anomalies.
The Two Incidents Binance Admitted To
First incident: asset transfer subsystem degradation.
Between 21:18 and 21:51 UTC, Binance experienced slowed internal transfers between Spot, Earn, and Futures. Matching and liquidation systems continued operating normally.
Some users briefly saw zero balances in the UI. This was a display fallback issue, not a loss of funds.
Binance says all affected users were fully compensated and that system upgrades were implemented afterward.
Second incident: index deviations.
Between 21:36 and 22:15 UTC, the indices for USDe, WBETH, and BNSOL deviated abnormally.
Binance attributes this to thin liquidity, overweight index inputs from its own order books, and insufficient deviation guards during extreme volatility.
Again, Binance says all impacted users were compensated and index methodologies were updated.
K-Line Controversy and Data Trust
Binance also addressed criticism around K-line chart adjustments.
After extreme wicks appeared on ATOM and IOTX charts, Binance briefly adjusted front-end displays to prevent misleading visuals. This change did not alter actual trade data or APIs.
Following community backlash, the update was rolled back.
Binance maintains it has never altered historical trading data.
The Counter Argument: OKX Blames Binance
Months after the crash, the debate reignited when Star Xu, CEO of OKX, publicly blamed Binance.
Xu claimed the Binance 10/10 crash was caused by irresponsible marketing campaigns. Specifically, he pointed to Binance’s USDe yield promotion offering up to 12% APR.
According to Xu, this product carried hedge-fund-level risk while being marketed to retail users.
He argued that many traders used USDe as collateral, borrowed against it, and looped leverage repeatedly. When volatility hit and USDe briefly depegged, the system collapsed.
Xu stated that even a small shock was enough to trigger cascading liquidations due to leverage loops.
The USDe Leverage Loop Debate
Binance launched the USDe yield promotion in September, just weeks before the crash.
The product allowed users to earn high yield while using USDe as collateral. Critics argue that the risks were not well understood by most traders.
If large amounts of capital were looped into leveraged positions using USDe, even a minor depeg could destabilize the system.
This remains the core disagreement. Binance says the crash was already underway. Critics say Binance helped build the leverage bomb.
Market Impact After 10/10
October’s crash was one of the largest liquidation events in crypto history. Some altcoins fell over 80% in a single day.
Bitcoin erased its recent all-time highs and has struggled to regain momentum since. Prices remain far below peak levels.
While markets stabilized, confidence was damaged.
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My Take
I’ve been using Binance since their ICO days in 2017.
Watching them rise from a startup exchange to a global crypto giant was impressive. But over the years, I also saw questionable practices. Wash trading. Unsustainable APYs. Promises that quietly disappeared.
That’s part of the game, some would say. You don’t become the biggest player without bending rules.
Because of that history, Binance will always carry the image of the player who will do whatever it takes to win.
That said, I do believe user funds are safe. Binance is extremely well-capitalized and heavily insured. For regular users, using Binance is not a bad decision.
Regarding USDe, the APY looked almost risk-free at first glance. I personally didn’t participate, mainly due to travel. But if I had, I likely would have explored looping to boost returns.
If large-scale leverage looping was easy and widely used, then yes — that becomes a serious systemic risk.
Did farmers cause the crash? Did it happen at scale? We don’t know. The data is opaque, and narratives can be shaped after the fact.
Based on history and experience, I believe Binance likely played a role in amplifying the crash. But proving causation is extremely difficult.
Final Words
The Binance 10/10 crash debate is not black and white.
Macro conditions, leverage, liquidity, and network congestion clearly played major roles. Binance’s platform issues came later, but they still mattered.
Whether Binance caused the crash or merely accelerated it may never be fully proven.
What matters more is the lesson.
High leverage, complex yield products, and thin liquidity always end the same way when volatility hits.
And October 10 was no exception.
If you enjoyed this blog, check out our latest list on crypto casinos, including farming strategies.
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