After October 10 Crypto Flash Crash, Expect a Wave of Lawsuits: Wintermute CEO

October 10 was no ordinary day when it came to crypto. Yes, Donald Trump “hit back” after China announced new plans to curb exports of rare earth metals. Truth Social, X is classic Trump. The president will not hesitate to show off the power of the United States.

The truth is this: the announcement of new tariffs on China should not force a mega-reduction on this lean Friday evening. A -10% drop in Bitcoin would be extreme. However, things quickly took a turn for the worse this October 10, and after what might have been a relatively “minor” trigger, the world’s most valuable coin crashed from over $120,000 to under $105,000 in 15 minutes.

According to Coinglass, more than $16 billion in leveraged positions, both long and short, were liquidated on October 10. The sheer scale of this liquidation makes October 10 the largest single-day liquidation event in history; a true crypto-black swan event.

(Source: coin mechanism)

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What happened? Why did crypto fail? Manipulation or system failure?

On the surface, it is easy to blame Trump.

However, digging deeper, Trump had nothing to do with the “other” crisis aside from a slight correction that would normally see BTC USD and some of the best cryptos to buy decrease -10% max.

Market capitalization

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There have been theories. Some blame Binance, the world’s largest cryptocurrency exchange, and others believe it’s just simple insider trading.

For those who believe the selloff was due to insider activity, they cite the huge shorts on Bitcoin and Ethereum placed less than an hour on Hyperliquid before the drop.

As 99Bitcoins reported, the trader, allegedly linked to the Trump family, denied any association and said the funds belonged to clients.

Others, however, place the blame squarely on Binance. In their view, the stock market exacerbated the decline by withdrawing liquidity and (un)intentionally amplifying volatility on a usually lean Friday evening, when traders prepare for the weekend.

Whether or not it was a systemic failure, traders and market makers, including Wintermute, were destroyed.

> Binance’s internal oracles cause $400 billion in liquidations in flash crash
> Binance offers $40 million in “recovery airdrop”

> Founders claim Binance charges over $5M in predatory token listing fees
> Binance threatens legal action

Are we seeing a trend here?
Withdraw your funds from Binance.

– curb.sol (@CryptoCurb) October 14, 2025

An anonymous whale on Binance lost over $450 million when his long BTC USDT position was closed. Wintermute lost more than $300 million. Another Chinese hedge fund lost more than $180 million. The list is long.

A Market Maker Friend Speaks Out: What Exactly Happened on the Night of 10/11 at Binance | Let the data and facts speak
I was doing spot and futures arbitrage, I have quite a few friends who are market makers. Many of them knew, directly or indirectly, that I had suffered heavy losses. Ironically,… pic.twitter.com/gUbH4LFaO9

— 812.eth (@GammaPure) October 20, 2025

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Lawsuits Coming: Wintermute CEO

To placate traders and hedge funds, Binance distributed freebies, dropping BNB to coin traders on the Binance Smart Chain.

However, this is not enough. Experts now expect a new wave of class action lawsuits that would target market manipulators, exchanges and even liquidity providers.

On

PSA to my friends:

If you suffered material losses on CEX during the October 10 flash crash and would like advice on how to pursue this, please feel free to send me a message.

Having acquired significant experience in high-stakes commercial litigation and thus being able to give an informed opinion on it.

-Arthur (@Arthur_0x) October 19, 2025

Binance would likely become the target of possible litigation.

In a recent podcast, Evgeny Gaevoy, the CEO of Wintermute, said that they are already evaluating their legal options and will take Binance to court over the malfunction of their automatic deleveraging (ADL) systems. Gaevoy said their ADLs were run at completely ridiculous prices.

CEO of Wintermute @EvgenyGaevoy on how they got ADL on Binance and predicted lawsuits and challenges from trading companies. pic.twitter.com/d2hGXoOOHc

– cryptotesters (@cryptotesters) October 20, 2025

Typically, centralized exchanges would position ADL during periods of extreme volatility to manage risk. Although it was a “last resort,” Gaevoy said Wintermute had to absorb positions at ridiculous and unreasonable prices that did not reflect market reality.

He noted a notification that a short position was closed at 5 times the actual market price, resulting in what he called an instant, uncoverable loss.

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The post After October 10 Crypto Flash Crash, Expect a Wave of Lawsuits: Wintermute CEO appeared first on 99Bitcoins.

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