Key points
Several altcoins, including Cosmos’s ATOM token, nearly dropped to zero on Binance during Friday’s cryptocurrency market crash.
The same altcoins retained actual market value on other centralized crypto exchanges.
On October 10, the cryptocurrency faced its most drastic decline since the FTX collapse, with total market capitalization plunging by around $850 billion in just a few hours.
Bitcoin (BTC) decreased by approximately 10–15%, falling from peaks of around $124,000 to lows of $105,000. Altcoins were particularly affected, especially those traded on Binance, with many seeing declines of 99.99-100% in mere minutes.
This included tokens like Cosmos (ATOM), IoTeX (IOTX), and Enjin (ENJ), whose values on Binance briefly reached zero.
In contrast, ATOM fell 53% on competing exchanges, while IOTX and ENJ dropped 46% and 64.5%, respectively. However, they did not experience zero valuations elsewhere, an occurrence unique to Binance.
What caused these altcoins to drop to zero?
Approximately $20 billion in crypto positions were liquidated during the crash from October 9-10, about 20 times greater than during the 2020 COVID-19 market collapse. More than 1.6 million traders lost their positions as leverage eliminated them.
Many traders employed leverage (borrowed capital) on Binance to amplify their earnings.
Arthur Hayes, BitMEX co-founder, noted that major exchanges, including Binance, were “liquidating collateral related to cross-margin positions,” intensifying the sell-off.
In simple terms, as prices began to drop, Binance automated the sale of altcoins used as collateral to mitigate losses. This led to increased selling pressure, rapidly driving prices lower.
As the prices fell, Binance’s trading systems became overwhelmed. Some users reported account freezes, missed stop-loss orders, and trade delays.
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 following $20B liquidations
This left a temporary lack of buy orders, causing the system to display “zero” prices for some coins, despite those tokens retaining value elsewhere.
A similar “flash crash” occurred in 2017 when Ethereum momentarily dropped to $0.10 on GDAX following a surge of automated sell orders.
Binance offers an apology
Yi He, Binance co-founder and Chief Customer Service Officer, apologized, acknowledging that “some users faced issues with their transactions” amid extreme market fluctuations and increased platform traffic.
CEO Richard Teng also expressed regret, stating:
“I’m truly sorry to everyone who was affected. We don’t make excuses — we listen closely, learn from what happened, and are committed to improvement.”
Binance affirmed that it will compensate users with identifiable losses directly associated with platform or system failures, specifying that losses stemming from price changes or unrealized gains are not eligible for compensation.
This article does not offer investment advice or recommendations. Every investment and trading action carries risk, and readers should conduct their own research when making decisions.
