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Introduction
Binance has disbursed $283 million in compensation to users affected by the October 10 cryptocurrency market meltdown, the largest liquidation event in crypto history. The exchange clarified that while technical glitches and triggered old limit orders exacerbated temporary disruptions, the crash was primarily driven by broader market conditions following geopolitical tensions. The incident saw over $19 billion in leveraged positions liquidated within 24 hours, impacting more than 1.6 million traders globally.
Key Points
- The crash was triggered by President Trump's threat of 100% tariffs on Chinese tech imports, causing over $19 billion in liquidations
- Binance determined that old limit orders from as early as 2019 were triggered during the sell-off, causing brief price nosedives
- The exchange clarified that the extreme market downturn occurred before the de-pegging event, not because of it
The $19 Billion Liquidation Event
The October 10 market crash represents the most significant liquidation event in cryptocurrency history, wiping out over $19 billion in leveraged positions within 24 hours. Triggered by President Trump’s threat of 100% tariffs on Chinese tech imports, the sell-off caused panic across multiple trading platforms, leading to more than $7 billion in liquidations within the first hour alone. The massive sell pressure erased nearly $1 trillion in market capitalization within three hours, surpassing previous market collapses including Terra Luna and FTX.
Major digital assets including Bitcoin (BTC) and Ethereum (ETH) experienced extreme price plunges during the downturn. The crash also affected synthetic tokens like USDE and BNSOL, which lost their pegs to underlying assets. According to Binance’s investigation, the extreme market downturn occurred between 21:20 and 21:21 UTC on October 10, while the severe de-pegging events happened after 21:36 UTC on the same day, indicating the market crash preceded the peg disruptions rather than being caused by them.
Binance's $283 Million Compensation Program
Binance moved quickly to address user losses, compensating affected customers with approximately $283 million within 24 hours of the market disruption. The comprehensive reimbursement program covered users who lost funds through collateral liquidations, delays in internal transfers, and issues with Earn product redemptions. The bulk of the compensation addressed impacts related to the de-pegging of Binance’s Earn products tied to USDE, BNSOL, and WBETH.
The exchange emphasized that its platform played only a minor role in the overall market decline, with forced liquidation volume processed by Binance accounting for a relatively low proportion of total trading volume. “The forced liquidation volume processed by Binance platform accounted for a relatively low proportion to the total trading volume, indicating that this volatility was mainly driven by overall market conditions,” the company stated in its official explanation of the events.
Technical Factors and System Improvements
Beyond the broader market conditions, Binance identified several technical factors that exacerbated the situation. The exchange revealed that sudden price drops in some spot trading pairs occurred when old limit orders, some placed as far back as 2019, were triggered during the sell-off at a time when there were very few buy orders. This created brief moments where certain token prices nosedived before returning to normal levels.
Display issues also contributed to user confusion during the crash. The “zero price” seen in pairs like IOTX/USDT was attributed to recent changes to the number of decimal places allowed for price movements rather than actual trading at zero value. Binance confirmed that its API remained unaffected during the incident and emphasized its commitment to transparency while implementing system improvements to prevent similar problems in the future, including fixes to the user interface and enhanced order management systems.
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