Binance said a technical failure at its exchange was not responsible for the October 10, 2025 flash crash that erased more than $19 billion in leveraged crypto positions, pushing back on claims that circulated in the hours after the sell-off.
The exchange acknowledged that two platform issues occurred during the most volatile stretch of trading but said they emerged only after most forced liquidations had swept through the market, countering criticism circulating on social media that has singled out Binance and its chief executive, Changpeng “CZ” Zhao.
Binance Investigation Details October 10 Flash Crash
As per Binance, the initial cause of the dislocation was a macro-driven risk-off shock in response to U.S. President Donald Trump’s threat to impose new tariffs on Chinese imports. U.S. equities lost about $1.5 trillion in value on that day, and the crypto market, already at record leverage, saw an immediate impact.
Open interest across bitcoin futures and options exceeded $100 billion at the time, leaving the market vulnerable to cascading liquidations once prices began to slide. Binance said its core matching engine, risk checks, and clearing systems “remained fully operational without interruption throughout.”
The exchange conceded that between 21:18 and 21:51 UTC, its internal asset-transfer subsystem experienced performance degradation, slowing movements between Spot, Earn, and Futures accounts. A separate issue between 21:36 and 22:15 UTC saw abnormal index deviations for USDe, WBETH, and BNSOL amid thin liquidity and slower cross-venue rebalancing.
Crucially, Binance said roughly 75% of the day’s liquidations had already occurred before the index deviations emerged, underscoring that the crash was “a market-wide risk-off and liquidation reflexivity, not platform-specific anomalies.”
Macro Shock, Thin Liquidity, and Market Maker Risk Controls
As prices fell, market makers’ algorithmic risk controls automatically reduced exposure, temporarily pulling liquidity from order books. Data from Kaiko showed that BTC liquidity across several venues fell to near zero within a 4% spread, amplifying the impact of each forced sale.
Ethereum network congestion further worsened the issue, as gas prices surged past 100 gwei, delaying arbitrage transactions that typically maintain equal prices across exchanges.
The Binance cryptocurrency exchange has said that it has paid out over $328 million to eligible users and has established a “Together Initiative” goodwill gesture valued at $300 million, in addition to a $100 million low-interest loan facility for institutional traders.
The exchange and its co-founder, Changpeng Zhao (CZ), have been criticized for the issue by individuals such as Cathie Wood of ARK Invest, while other allegations have been leveled against JPMorgan Chase and the liquidity provider Wintermute.
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