At first glance, the $19 billion liquidity loss on October 10 seemed routine: a rapid chain of liquidations, or forced closures of trading positions, on major exchanges like bitcoin. the largest cryptocurrency, fell.
It’s what followed, and the lack of transparency about the day’s events, that made the largest single-day liquidation by dollar value in cryptocurrency history frustrating for traders and fundamentally changed cryptocurrency trading.
And one name catches everyone’s attention: Binance.
The world’s largest cryptocurrency exchange has become, for many, the face of the crisis, in which bitcoin fell by up to 12.5%, the biggest drop in 14 months. That forced exchanges to close or liquidate leveraged positions that had run out of funds to remain open.
Whether it’s Binance’s scale, its dominance in derivatives trading, or the lack of clarity over what exactly happened, on any given day, social media features multiple accusations claiming that the exchange was the main reason why October 10 (now known to many as 10/10) occurred.
Binance maintains to this day that the closures were not the exchange’s fault. The company did not respond to a CoinDesk request for comment for this article.
Still, with no one taking charge of the narrative, it’s easy to see why an event like this has traders nervous.
In the months since the crisis, liquidity in much of the market has remained noticeably tighter. The order books have not been completely reconstructed. Market depth (the ability to sustain relatively large market orders without significantly affecting price) is more irregular, while the difference between buyers’ and sellers’ prices is wider. Many traders say the damaged market structure contributed to bitcoin’s fall from $124,800 to $80,000 and eroded traders’ confidence.
Now, Ark Invest CEO Cathie Wood has added her voice to the outcry, attributing bitcoin’s weakness to “a bug in Binance’s software.”
Why Binance is once again at the center of the debate
Wood spoke on Fox Business in late January and said the issue caused a deleveraging of about $28 billion.
Binance co-founder He Yi responded online, noting that Binance does not serve US persons, although the post was later deleted.
Competitors seized the opportunity. Star Xu, founder of rival exchange OXK, wrote that Oct. 10 caused “real and lasting damage to the industry.” While he did not refer to Binance, his comments were widely interpreted as a scathing criticism of his rival’s role.
Meanwhile, rivals such as decentralized exchange Hyperliquid highlighted gains in derivatives volume and depth of liquidity, positioning themselves as alternatives as Binance faces a reputation issue.
Binance maintains that October 10 was not the result of an internal systems issue.
During a Q&A on Friday, co-founder and former CEO Changpeng “CZ” Zhao said suggestions that Binance caused the crash were “far-fetched.”
The company described the event as driven by “market factors,” citing macroeconomic pressure, high leverage, illiquid conditions, and congestion on the Ethereum network. Binance said its core systems remained operational and paid approximately $283 million in compensation to affected users.
‘Spit in our faces’
For some, that explanation is not enough, particularly given the scale of the liquidations, and the $19 billion figure has taken on enormous symbolic weight. Binance’s compensation figure is often presented less as restitution than as a fraction of the damage.
“This is a fucking joke,” wrote the pseudonymous Bitcoin Realist on
Anger reflects something broader than a single volatility event. For many, October 10 has become an indicator of distrust in the structure of the crypto market.
However, not everyone agrees that Binance deserves the role of villain.
“Obviously, 10/10 was not a ‘software glitch,'” Evgeny Gaevoy, CEO of market maker Wintermute, wrote on X. “It was a sudden drop in a mega leveraged market on illiquid Friday night driven by macro news.”
He added: “Finding a scapegoat is convenient, but blaming this on a trade is intellectually dishonest.”
The argument is simple: cryptocurrencies still have high structural leverage and liquidity is usually conditional. Market makers widen spreads or pull back completely during stresses. In conditions of scarcity, liquidations accelerate.
Binance may have been the biggest place where the drop occurred, but it wasn’t necessarily the source of the shock.
Transparency gap keeps speculation alive
What is missing is a public review and an official narrative. Critics argue that the absence of detailed investigation leaves room for speculation to snowball.
Salman Banaei, a former regulator at the US Commodity Futures Trading Commission (CFTC), suggested on October 10 that an investigation is warranted, even without alleging wrongdoing.
“Whether you love or hate cryptocurrencies, regulators should conduct an investigation until October 10, 2025,” Banaei wrote, comparing it to the stock market flash crash of May 6, 2010. “One benefit of regulation is that the risk of such investigations deters manipulation.”
He was careful to note that he was not claiming tampering had occurred. But the broader point is that crypto markets lack the formal post-mortems that traditional finance relies on after systemic shocks.
One trader, known as Flood, suggested that a major exchange had been “relentlessly selling altcoins since 10/10,” fueling conspiracy theories about excess inventory.
Whether true or not, such claims tend to flourish when liquidity disappears and trust erodes.
Deeper problem is market depth, not a trade
Ultimately, October 10 may be remembered less for the liquidation figure than for what it revealed about market structure.
In a bull market, order books are plentiful, leverage is quietly accumulating, and liquidity is plentiful.
Bear markets expose the opposite. Liquidity declines, market makers retreat, volatility concentrates, and the next shock moves faster than expected.
Referring to the collapse of the FTX cryptocurrency exchange in 2022, Ether.fi CEO Mike Silagadze wrote on
Binance is the easiest scapegoat because it is the largest exchange and therefore the most visible location and obvious target.
But the deeper problem is structural. Crypto liquidity continues to rely on leverage, conditional market making, and trust, all of which have been lost in the void over the past four months.
“I don’t know if Binance played a role in deliberately ruining the market in October, I would probably lean more towards the obvious, which is: high levels of leverage, low levels of liquidity, generally useless or unwanted altcoin ‘techs’ are a recipe for a massacre and that is exactly what happened,” said Eric Crown, former options trader at NYSE Arca.
“It was always a question of when, not if.”
