Key takeaways
Various altcoins, such as Cosmos’s ATOM token, briefly plummeted to near zero on Binance during the recent cryptocurrency market crash on Friday.
These altcoins retained actual market value on other centralized crypto exchanges.
On Oct. 10, the cryptocurrency experienced its most significant decline since the FTX collapse, resulting in a total market capitalization drop of roughly $850 billion in just a few hours.
Bitcoin (BTC) dropped around 10–15%, sinking from highs of approximately $124,000 down to lows of $105,000. However, altcoins suffered substantially more, particularly those listed on Binance, with many plummeting 99.99-100% in a matter of minutes.
This included tokens like Cosmos (ATOM), IoTeX (IOTX), and Enjin (ENJ), which saw their prices on Binance briefly hit zero.
In contrast, ATOM dropped 53% on competing exchanges, while IOTX and ENJ fell by 46% and 64.5%, respectively. None of these tokens touched zero valuations on any other platforms—a phenomenon unique to Binance.
Why did these altcoins fall to zero?
Nearly $20 billion in crypto positions were liquidated during the crash on Oct. 9-10, about 20 times more than what was seen during the 2020 COVID-19 market downturn. Over 1.6 million traders lost their positions as leverage wiped them out.
Many traders utilized leverage (borrowed funds) on Binance to amplify their profits.
BitMEX co-founder Arthur Hayes mentioned that major exchanges, such as Binance, were “liquidating collateral tied to cross-margin positions,” which worsened the sell-off.
Simply put, as prices began to decline, Binance automatically liquidated altcoins used as collateral to cover losses. This triggered additional selling pressure, accelerating the drop in prices.
As prices crashed, Binance’s trading system became overwhelmed. Several users reported frozen accounts, missed stop-loss orders, and delayed trades.
Simultaneously, some analysts noted that market makers like Wintermute withdrew their funds from Binance due to these delays.
Related: Crypto.com CEO calls for probe into exchanges after $20B liquidations
This created a lack of buy orders for a brief moment, causing the system to display “zero” prices for some coins, even though those tokens retained value elsewhere.
A similar “flash crash” occurred in 2017 when Ethereum temporarily 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) issued an apology, acknowledging that “some users have faced issues with their transactions” during the period of extreme volatility and increased platform traffic.
CEO Richard Teng also apologized, stating:
“I’m truly sorry to everyone who was impacted. We don’t make excuses — we listen closely, learn from what happened, and are committed to doing better.”
Binance announced it will compensate users for verifiable losses directly tied to platform or system failures, clarifying that losses due to price fluctuations or unrealized gains will not qualify for compensation.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
