Binance blamed the October 10 flash crash on macro shocks combined with high leverage and evaporating liquidity, rather than speculative comments on social media that led to the collapse of its trading system.
Global markets are already facing pressure from trade war headlines as cryptocurrency markets collapse, the exchange said in a report published on Saturday. Bitcoin and Ethereum rose for several months in early October, leaving traders with heavy positions and exposure.
At the time, open interest in Bitcoin futures and options exceeded $100 billion, creating conditions ripe for forced deleveraging once prices began to fall.
The sell-off soon intensified. As prices fell, market makers activated automated risk controls and reduced exposure, draining liquidity from the order book. Data from Kaiko cited by Binance shows that at the peak of the move, bidder depth on several major exchanges all but disappeared. Even small liquidations can cause prices to drop significantly as remaining orders dwindle.
Disruption is not limited to cryptocurrencies. The U.S. stock market lost an estimated $1.5 trillion that day, with the S&P 500 and Nasdaq suffering their biggest single-day losses in six months. Binance said that about $150 billion in systemic liquidations occurred in global markets.
Blockchain congestion adds to the pressure. Ethereum gas fees sometimes soar above 100 gwei, slowing transfers and limiting arbitrage between venues. Since funds cannot flow quickly, price gaps widen and liquidity is further dispersed.
Binance events that happened
Binance acknowledged that two platform-specific events occurred during the crash but said neither caused broader market volatility.
The first incident involved a slowdown in its internal asset transfer system between 21:18 and 21:51 UTC, affecting transfers between spot, income and futures accounts. The core trading system is still running, but some users are temporarily seeing zero balances due to backend timeouts.
Binance said the issue stemmed from database performance degradation during traffic surges and has now been resolved. Affected users were compensated.
The second incident involved temporary index deviations for USDe, WBETH and BNSOL between 21:36 and 22:15 UTC, when most liquidations had already occurred. Binance said that thin liquidity and delayed rebalancing across venues caused local price movements to disproportionately affect index calculations.
Methodological changes have since been implemented and affected users have been compensated.
Binance said that about 75% of liquidations on the day occurred before index deviations, pointing to the initial macro shock as the main driver.
The exchange said it has provided more than $328 million in compensation to users in total and launched additional support programs to stabilize participants affected by the crash.
