At first glance, the $19 billion liquidity evaporation that occurred on October 10 looks ordinary: like Bitcoin, major exchanges saw a series of rapid liquidations or forced liquidations of trading positions The largest cryptocurrency plunged.
What happened next and the lack of transparency into the day’s events resulted in the largest single-day liquidation by dollar value in cryptocurrency history, frustrating traders and fundamentally changing cryptocurrency trading.
And one name caught everyone’s attention: Binance.
For many, the world’s largest cryptocurrency exchange has become the face of the collapse, with Bitcoin falling as much as 12.5%, its biggest drop in 14 months. This forces exchanges to close or liquidate leveraged positions that have depleted funds to keep them open.
Whether it’s because of Binance’s size, its dominance in derivatives trading, or the lack of clarity on what exactly happened, on any given day multiple accusations pop up on social media claiming that the exchange was the biggest reason what happened on October 10 (now referred to by many as 10/10).
Binance still insists that the shutdown was not the exchange’s fault. The company did not respond to CoinDesk’s request for comment for this article.
Still, with no one in control of the story, it’s easy to see why events like this make traders nervous.
In the months since the crash, liquidity has remained significantly thin across most markets. The order book has not yet been completely rebuilt. Market depth (the ability to sustain relatively large market orders without significantly affecting price) is more dispersed, while the spread between buyer and seller pricing is wider. Many traders said the damaged market structure caused Bitcoin to fall from $124,800 to $80,000 and eroded trader trust.
Now, Ark Invest CEO Cathie Wood has joined the fray, attributing Bitcoin’s weakness to a “Binance software glitch.”
Why Binance is back at the center of controversy
Speaking on Fox Business in late January, Wood said the glitch triggered a deleveraging of about $28 billion.
Binance co-founder He Yi responded online that Binance did not provide services to U.S. individuals, but the post was later deleted.
Competitors seized the opportunity. Star Xu, founder of rival exchange OXK, wrote that October 10 caused “real and lasting damage” to the industry. While he did not mention Binance, his comments were widely interpreted as a sharp criticism of its rival’s role.
Meanwhile, challengers such as decentralized exchange Hyperliquid have highlighted growth in derivatives trading volume and liquidity depth, positioning themselves as alternatives at a time when Binance faces a reputational drag.
Binance insists that the October 10 incident was not caused by an internal system issue.
During an “Ask Me Anything” event on Friday, co-founder and former CEO Changpeng Zhao said the suggestion that Binance caused the collapse was “far-fetched.”
The company said the incident was driven by “market factors,” citing macroeconomic pressures, high leverage, lack of liquidity, and congestion on the Ethereum network. Binance said its core systems are still running and has paid approximately $283 million in compensation to affected users.
“Spit in our faces”
For some, that explanation isn’t enough, especially given the scale of the liquidation and the $19 billion figure that already takes on huge symbolic significance. Binance’s compensation figures are often viewed as a fraction of damages rather than compensation.
“This is a huge joke,” a pseudonymous Bitcoin realist wrote on
This outrage reflects more than a single volatile event. For many, October 10th has come to represent distrust in the structure of the cryptocurrency market.
However, not everyone thinks Binance deserves to play the villain.
Evgeny Gaevoy, CEO of market maker Wintermute, wrote on
He added: “It’s comfortable to find a scapegoat, but it’s intellectually dishonest to blame this on a single transaction.”
The argument is simple: Cryptocurrencies are still structurally heavily leveraged, and liquidity is often conditional. Market makers are under pressure to widen spreads or exit entirely. In the case of thin funds, liquidation will be accelerated.
Binance may have been the biggest venue for this crash, but it wasn’t necessarily the source of the shock.
Transparency gap keeps speculation alive
What’s missing is public comment and an official narrative. Critics say the lack of detailed investigation leaves room for speculation to snowball.
Former U.S. Commodity Futures Trading Commission (CFTC) regulator Salman Banaei recommended an investigation on October 10, even though there is no allegation of wrongdoing.
“Whether you love cryptocurrencies or hate them, regulators should investigate on October 10, 2025,” Banaei wrote, comparing it to the May 6, 2010 stock market flash crash. “One benefit of regulation is that the risk of such investigations can deter manipulation.”
He was careful to point out that he was not claiming manipulation occurred. But the broader point is that crypto markets lack the formal post-mortem analysis that traditional finance relies on after systemic shocks.
One trader named Flood suggested that a major exchange has been “constantly selling altcoins since October 2010,” fueling conspiracy theories about overstocking.
Whether true or not, this narrative tends to prevail when liquidity disappears and confidence suffers.
The deeper issue is market depth, not a single exchange
What people may ultimately remember about October 10th is not the number of liquidations but what it revealed about the market structure.
In a bull market, order books are thick, leverage is quietly built, and liquidity is abundant.
Bear markets reveal the opposite. Liquidity is thin, bookmakers retreat, volatility is concentrated, and the next shock breakout is faster than expected.
Referring to the collapse of cryptocurrency 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 obvious venue and obvious target.
But the deeper problem is structural. Cryptocurrency liquidity still relies on leverage, conditional market making, and confidence, all of which have evaporated over the past four months.
Eric Crown, a former options trader at NYSE Arca, said: “I don’t know if Binance played a role in deliberately disrupting the market in October, I would probably lean more towards the obvious that high leverage, low liquidity, generally useless or unwanted altcoin ‘tech’ is a recipe for carnage, and that’s exactly what happened.”
“It’s always a question of when, not if.”
