At first glance, the $19 billion liquidity wipe on October 10 seemed unremarkable: a rapid chain of liquidations, or forced closures of trading positions, on major exchanges like Bitcoin. the largest cryptocurrency, fell.
It was what followed, along with the lack of transparency about the day’s events, that made the largest single-day liquidation by dollar value in crypto history frustrating for traders and fundamentally changed crypto trading.
And one name catches everyone’s attention: Binance.
For many, the world’s largest cryptocurrency exchange has become the face of the crash, which saw bitcoin fall as much as 12.5%, the biggest in 14 months. This forced exchanges to close or liquidate leveraged positions that were short of funds to remain open.
Whether due to the scale of Binance, its dominance in derivatives trading, or the lack of clarity on what exactly happened, every day social media sports multiple accusations claiming that the exchange was the main reason why October 10 (now known to many as 10/10) happened.
Binance maintains to this day that the shutdowns were not the exchange’s fault. The company did not respond to a request for comment from CoinDesk for this article.
Yet, without anyone owning the narrative, it is easy to understand why such an event puts traders on edge.
In the months following the crash, liquidity across much of the market remained noticeably thinner. Order books are not fully replenished. Market depth (the ability to support relatively large market orders without significant impact on price) is more uneven, while the spread between buyers’ and sellers’ prices is wider. Many traders say the battered market structure contributed to bitcoin’s decline from $124,800 to $80,000 and eroded trader confidence.
Today, Cathie Wood, CEO of Ark Invest, added her voice to the clamor, attributing Bitcoin’s weakness to “a Binance software issue.”
Why Binance is returning to the center of the debate
Wood spoke on Fox Business in late January, saying the problem had triggered a deleveraging of about $28 billion.
Binance co-founder He Yi responded online, noting that Binance does not serve US individuals, although the post was later deleted.
The competitors seized the opening. Star Xu, founder of rival exchange OXK, wrote that October 10 caused “real and lasting damage to the industry.” Although he did not refer to Binance, his comments were widely interpreted as a pointed criticism of his rival’s role.
Meanwhile, challengers such as decentralized exchange Hyperliquid have highlighted gains in derivatives volume and liquidity depth, positioning themselves as alternatives as Binance faces a reputational problem.
Binance maintains that October 10 was not the result of an internal system issue.
At an “ask me anything” event 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 being driven by “market factors,” citing macroeconomic pressure, high debt, illiquid conditions, and congestion on the Ethereum network. Binance said its core systems remained operational and that it had paid approximately $283 million in compensation to affected users.
“Spit in our faces”
For some, this explanation is not sufficient, especially given the scale of the liquidations, and the figure of $19 billion has taken on disproportionate symbolic weight. Binance’s compensation amount is often presented less as restitution and more as a fraction of the damages.
“This is a fucking joke,” wrote the pseudonymous Bitcoin Realist on
Anger reflects something larger than just a 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.
“The 10/10 was obviously not a ‘software glitch,'” Evgeny Gaevoy, CEO of market maker Wintermute, wrote on
He added: “Finding a scapegoat is comfortable, but blaming a single exchange is intellectually dishonest. »
The argument is simple: crypto remains structurally heavy in terms of leverage and liquidity is often conditional. Market makers widen spreads or withdraw altogether during times of stress. In difficult conditions, liquidations accelerate.
Binance may have been the biggest crash location, but it wasn’t necessarily the source of the shock.
Lack of transparency fuels speculation
What is missing is public scrutiny and an official narrative. Critics say the lack of detailed investigation leaves room for snowballing speculation.
Salman Banaei, a former regulator at the US Commodity Futures Trading Commission (CFTC), suggested that October 10 warrants an investigation, even without alleging wrongdoing.
“Whether you love or hate crypto, regulators should conduct an investigation on October 10, 2025,” Banaei wrote, comparing it to the flash market 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 there was manipulation. But the broader point is that crypto markets lack the formal post-mortem analyzes that traditional finance relies on after systemic shocks.
One trader, known as Flood, insinuated that a major exchange was “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 confidence erodes.
The deeper problem is market depth, not a single exchange
October 10 will perhaps be remembered less for the liquidation figure than for what it revealed about market structure.
In a bull market, order books are thick, debt builds gradually, and liquidity is plentiful.
Bear markets reveal the opposite. Liquidity decreases, market makers retreat, volatility concentrates and the next shock manifests itself more quickly than expected.
Referring to the collapse of crypto exchange FTX 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 venue and obvious target.
But the deeper problem is structural. Cryptocurrency liquidity remains dependent 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 look more towards the obvious: high leverage, low amounts of liquidity, generally useless or unwanted altcoin ‘tech’ is a recipe for a massacre and that’s exactly what happened,” said Eric Crown, former options trader at NYSE Arca.
“It was always a question of when, not if.”
