The Binance Glitch: Who Really Killed the Bull Market on 10/10?

For 40 minutes on the night of Friday 10 October 2025, a digital dollar was worth 65 cents. Not everywhere. On every other big exchange, in trading pools such as Curve and in lending markets such as Aave, USDe, a dollar token issued by Ethena Labs, stayed within a cent of $1. Only on Binance, the world's largest crypto exchange, did it collapse. And because Binance used that price to decide how much its customers' accounts were worth, thousands of them were wiped out by a number that existed nowhere else.

That was the worst hour of the worst day crypto markets have had. In 24 hours about $19.2 billion of bets were forcibly closed across 1.6 million trader accounts, according to the data firm CoinGlass, roughly double the previous record. Bitcoin, which had set an all-time high of $126,080 four days earlier, fell from about $121,600 to around $104,000. A year later, the industry is still arguing about whose fault it was.

The match: a tariff post on a Friday night

The trigger is not disputed. On 10 October President Donald Trump attacked China's new limits on exports of rare earth minerals, and shortly before 21:00 UTC, after Wall Street had closed for the weekend, he announced an extra 100% tariff on Chinese imports. Crypto trades every hour of every day, so it was the only big market still open to absorb the shock.

What turned a sell-off into a wipeout was leverage, which means trading with borrowed money. A trader puts down a deposit, called margin, and the exchange lets them bet as if they had ten or fifty times as much. A long is a bet that the price rises; a short is a bet that it falls. If the price moves far enough against a leveraged trader to eat the deposit, the exchange closes the bet automatically at whatever price it can get. That forced sale is a liquidation: a stockbroker's margin call with no phone call and no chance to top up. Every forced sale pushes the price lower, which triggers the next one. Going into 10 October the market was carrying record borrowing and nearly everyone was leaning the same way. Over the 40 minutes after the tariff post, about $6.9 billion of positions were liquidated, roughly 70% of the day's total.

The powder keg: Binance's own prices

Binance runs what it calls a Unified Account, which lets customers post tokens they hold as collateral for their bets, the way a broker lets a client borrow against a share portfolio. Three accepted tokens were USDe and two of Binance's own products: wBETH and BNSOL, receipts for ether and solana that customers had locked up to earn interest, a process called staking.

The question is how a lender values the security it holds. Most crypto lending systems use an oracle, an outside price feed such as Chainlink that blends prices from many markets, much as a bank values a share portfolio at the official closing price rather than at the last trade in one back room. Binance priced these three tokens from its own order book, the live list of buy and sell orders on its own exchange. That works in calm markets. When buyers vanish, one exchange's order book can show almost any price.

On 6 October Binance had announced it would change how it priced wBETH and BNSOL, with the new method going live on 14 October. The crash landed inside that eight-day gap. Between 21:36 and 22:16 UTC, USDe traded as low as $0.65 on Binance. wBETH, worth thousands of dollars that morning, printed at $430. BNSOL fell from about $237 to $35. Chainlink's USDe feed barely moved. Anyone whose bets were backed by those tokens saw their collateral marked down by a third or more in seconds, and the liquidation machine did the rest. Traders also reported frozen screens and failed orders; Binance said some platform modules slowed after 21:18 UTC but that its core trading engines stayed up.

Binance's version

Binance said the crash was driven by the macro shock, crowded leverage and vanishing liquidity, and that about 75% of the day's liquidations happened before its internal prices broke. It called the depeg, the moment a token meant to hold $1 loses that price, a symptom rather than the cause. It still paid out. Within days it compensated users who had been liquidated while holding the three tokens, a total of about $283 million, and on 14 October launched a $400 million "Together Initiative" of vouchers for hard-hit traders and low-interest loans for trading firms. Co-founder Yi He and chief executive Richard Teng apologised publicly. At an "ask me anything" session in January 2026, co-founder Changpeng Zhao called the idea that Binance caused the crash "far-fetched".

The critics' version

Star Xu, founder of the rival exchange OKX, blamed a Binance promotion launched on 22 September 2025 that paid up to 12% a year on USDe deposits and drew billions of dollars of the token onto the exchange. Traders, he argued, swapped other digital dollars such as USDT and USDC for USDe to collect the yield, then borrowed against it, building a stack of leverage nobody was tracking. "People have underestimated the impact of 10/10," he wrote. "The incident caused real and lasting damage to the industry."

Guy Young, Ethena's founder, said the token itself never failed: it stayed close to $1 where most of it traded, and "no one would have been liquidated on any money market with oracles referencing the deepest pools of liquidity." Haseeb Qureshi, a partner at the investment firm Dragonfly, put it in five words: "USDe did not depeg. Binance did."

Others went further. Martin Hiesboeck, head of research at the broker Uphold, called it "Luna 2" and argued that someone deliberately exploited the gap between Binance's 6 October announcement and the 14 October fix. Suspicion also fell on an account on Hyperliquid, a crypto exchange run on its own blockchain, which opened short bets on bitcoin and ether worth about $1.1 billion roughly half an hour before the 100% tariff post and closed them at a large profit. A pseudonymous on-chain sleuth linked the wallet to Garrett Jin, a former chief executive of the defunct exchange BitForex; Jin denied it was insider trading and said the money belonged to clients. No regulator or court has found that anyone manipulated the market or traded on advance knowledge.

In January 2026 Cathie Wood, chief executive of ARK Invest, told Fox Business the crash was "associated with a software glitch on Binance" and put the total forced selling at about $28 billion. Yi He replied in a post she later deleted: "Cathie Wood isn't a Binance user. We don't serve US individuals or entities. No offense." Tom Lee of Fundstrat told CNBC it was "essentially a bug, a code error". Kris Marszalek, chief executive of Crypto.com, called on regulators to look at exchanges with high liquidation volumes. Salman Banaei, a former staff member at the US Commodity Futures Trading Commission, compared 10/10 with the 2010 stock market flash crash and argued for a formal inquiry because "the risk of such investigations deters manipulation."

A year later

The tariff never arrived: Trump and China's President Xi Jinping agreed a truce in Busan on 30 October 2025. Bitcoin never got its record back. It fell to about $69,000 by February 2026 and to $57,800 on 1 July 2026, and on the first anniversary of the crash it was trading near $83,000, about a third below the morning of 10 October 2025. Through early 2026 order books stayed thin and spreads, the gap between the best price to buy and the best price to sell, stayed wide as market makers were slow to return. USDe's supply fell from about $14.7 billion to about $6.3 billion in two months.

Law firms in Hong Kong and London said in early 2026 that they were exploring claims for Binance users. As of mid-October 2026 no court has ruled on 10/10 and no regulator has published findings on it. Binance says the market broke under pressure. Its critics say Binance broke the market. The $19 billion is gone either way.