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Some altcoins, such as Cosmos’s ATOM token, temporarily dropped to near zero on Binance during the crypto market crash on Friday.
These altcoins maintained actual market value on other centralized exchanges.
On October 10, the cryptocurrency experienced its largest decline since the FTX collapse, with the total market cap plummeting by around $850 billion in just hours.
Bitcoin (BTC) decreased by approximately 10–15%, from peaks of nearly $124,000 to troughs of $105,000. Altcoins had even larger losses, particularly those on Binance, many of which dropped 99.99-100% in mere minutes.
This includes tokens like Cosmos (ATOM), IoTeX (IOTX), and Enjin (ENJ), which briefly hit zero on Binance.
In comparison, ATOM dropped 53% on competing exchanges, while IOTX and ENJ fell by 46% and 64.5%, respectively. Nonetheless, none hit zero valuations on any other platform, a situation unique to Binance.
What Caused these Altcoins to Drop to Zero?
Nearly $20 billion in crypto positions were liquidated during the crash on October 9-10, roughly 20 times more than during the 2020 COVID-19 market crash. Over 1.6 million traders were wiped out due to leverage liquidation.
Many traders utilized leverage on Binance to amplify their gains.
BitMEX co-founder Arthur Hayes noted that major exchanges, including Binance, were “liquidating collateral tied to cross-margin positions,” intensifying the sell-off.
In simple terms, as prices began to decline, Binance automatically sold altcoins used as collateral to mitigate losses. This led to increased selling pressure, further driving prices down.
As prices collapsed, Binance’s trading systems faced overload issues. Some users reported account freezes, missed stop-loss orders, and delayed transactions.
At the same time, some analysts indicated that market makers like Wintermute withdrew their funds from Binance due to these delays.
Related: Crypto.com CEO calls for investigation into exchanges after $20B liquidations
This meant there were no remaining buy orders for a brief period, resulting in the system displaying “zero” prices for certain coins, despite those tokens retaining value elsewhere.
A similar “flash crash” took place in 2017 when Ethereum momentarily dropped to $0.10 on GDAX following a surge of automatic sell orders.
Binance Issues an Apology
Binance co-founder Yi He (Chief Customer Service Officer) apologized, acknowledging that “some users have faced transaction issues” amid significant volatility and a spike in platform traffic.
CEO Richard Teng also expressed regret, stating:
“I’m truly sorry to everyone who was affected. We accept responsibility — we listen carefully, learn from the situation, and are dedicated to improving.”
Binance announced it will reimburse users with provable losses directly related to system or platform failures, clarifying that losses due to price swings or unrealized gains do not qualify for compensation.
This article does not include investment advice or recommendations. Any investment and trading decision carries risk, and readers should conduct their own research before making a decision.
