Global markets plunged on October 10 following the announcement of a 100% tariff on Chinese imports by US President Donald Trump, inciting fear across equities and digital assets.
In mere minutes, a series of forced liquidations wiped out nearly $20 billion from crypto traders’ positions.
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System Glitch or Market Manipulation?
The chaos rapidly spread through major centralized exchanges. Users on Binance and other platforms reported unresponsive dashboards, failed stop-loss orders, and flash crashes that temporarily drove several tokens toward zero.
The disruptions caused widespread frustration among trading communities. Many traders speculated whether the crypto exchanges’ systems had failed or if there was a more sinister market manipulation at play.
In light of this, Crypto.com CEO Kris Marszalek called for an independent investigation into exchanges that experienced the most significant liquidations during the market downturn. He claimed billions in users’ funds disappeared overnight, urging regulators to intervene for their protection.
OKX CEO Star Xu also weighed in, indirectly pointing fingers at Binance for the current market conditions.
He stated that when an exchange “enters the game” by inflating token prices, employing various affiliated identities, and manipulating user sentiment through hype, it undermines trust and ultimately leads to its own downfall.
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Xu’s remarks brought to mind previous controversies—most notably the fall of FTX in 2022. The defunct exchange accused Binance of hastening its collapse through public statements and a rapid withdrawal of support.
“‘Fired the shot’ that took down FTX may have succeeded in eliminating a competitor, but what followed wasn’t an expansion of their own market share — it was a systemic collapse of the entire industry, and a series of even more dramatic ‘lives.’ In that chain reaction, there were no real winners,” Xu said.
Was Binance Targeted During Market Collapse?
Meanwhile, crypto experts like Wu Blockchain suggested that the crash may have stemmed from weaknesses in Binance’s Unified Account system.
This system allows users to use various assets—including USDE, wBETH, and BnSOL—as collateral for leveraged trades. When those assets lose their stability, margin requirements quickly escalate, sparking a cascade of automated liquidations.
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As the collateral values plummeted—USDE to $0.65, wBETH to $0.20, and BnSOL to $0.13—numerous traders on the platform saw their positions obliterated despite having hedging measures in place.
Additionally, algorithmic bots exacerbated the decline by triggering sell orders across exchanges, intensifying market volatility.
This wave of failures reignited long-standing concerns over the transparency and liquidity practices of exchanges, especially during times of extreme stress.
“Another piece of evidence suggesting the attack was premeditated is the timing—it occurred precisely between Binance’s announcement of an oracle price adjustment and the actual implementation. The announcement was made on October 6, with the change scheduled for October 14, providing attackers with a clear window of opportunity,” Wu Blockchain reported.
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BeInCrypto also highlighted numerous tweets from users who experienced difficulties in trading, withdrawing their assets, or even activating stop-loss orders during the downturn.
In light of these developments, Binance has issued an apology to its affected users and committed to compensating them.
In a statement, Binance co-founder Yi He attributed the issues to “extraordinary market turbulence and user surges” that disrupted standard operations.
He assured a case-by-case assessment for users who could demonstrate their technical losses. However, she clarified that unrealized gains or losses driven by price fluctuations would not be eligible for reimbursement.
“The reason Binance is Binance is that we never shy away from problems. When we fall short, we take responsibility—there are no excuses or justifications. We are committed to serving every user to the best of our ability, and we will manage what we are responsible for,” she added.
