At first glance, the $19 billion liquidity drain on October 10 seemed routine. Similar to Bitcoin, there is a chain of rapid liquidations across major exchanges, or the forced closure of trading positions. BTC$77,634.56The largest virtual currency has collapsed.
What happened next, and the lack of transparency about the day's events, resulted in the largest single-day liquidation in dollar value in crypto history, frustrating traders and fundamentally changing crypto trading.
And there's one name that everyone has their eye on. That's Binance.
The world's largest cryptocurrency exchange became the face of the selloff for many, with Bitcoin dropping 12.5%, its biggest decline in 14 months. This forced exchanges to run out of money and hold on to leveraged positions, or to close or liquidate them.
Whether it's because of Binance's size, its dominance in derivatives trading, or the fact that it's unclear exactly what happened, multiple accusations are being reported on social media every day that the exchange was the primary reason why October 10th (now known to many as 10/10) happened.
To this day, Binance has maintained that the shutdown was not the exchange's fault. The company did not respond to CoinDesk's request for comment for this article.
Still, even if no one owns the story, it's easy to see why events like this make traders nervous.
In the months since the crash, much of the market remains extremely illiquid. The order book has not been completely rebuilt. Market depth (the ability to sustain relatively large market orders without significantly impacting prices) is patchy, but the spread between buyer and seller pricing is wider. Many traders say the damaged market structure contributed to Bitcoin's fall from $124,800 to $80,000, eroding trader confidence.
Now, Ark Invest CEO Cathie Wood has added her voice to the controversy, blaming Bitcoin's weakness on a “bug in Binance's software.”
Why Binance is back at the center of the discussion
Speaking on FOX Business in late January, Wood said the glitch caused about $28 billion in deleveraging.
Binance co-founder He Yi responded online, pointing out that Binance does not provide services to individuals in the United States, but the post was later deleted.
Competitors took advantage of the gap. Star Xu, founder of rival exchange OXK, wrote that October 10 had caused “real and lasting damage to the industry.” Although he did not mention Binance, his comments were widely interpreted as a sharp criticism of the rival's role.
Meanwhile, challengers such as decentralized exchange HyperLiquid have emphasized increasing volume and depth of liquidity for derivatives trading, positioning themselves as an alternative as Binance faces reputational damage.
Binance claims that October 10th was not due to an internal system issue.
At Friday’s Ask Me Anything event, co-founder and former CEO Changpeng “CZ” Zhao said the suggestion that Binance caused the crash was “far-fetched.”
The company explained that the event was caused by “market factors,” citing macroeconomic pressures, high leverage, illiquidity, and congestion on the Ethereum network. Binance said its core systems remain operational and that it has paid approximately $283 million in compensation to affected users.
“He spat in my face.”
Some believe that explanation is insufficient, especially given the size of the liquidation, and the $19 billion figure carries symbolic weight. Binance's compensation amount is often treated as part of damages rather than compensation.
“This is a terrible joke,” a pseudonymous Bitcoin Realist wrote to X. “You… liquidated $19 billion on October 10th alone… This is like spitting in our faces.”
Anger reflects something broader than a single fluctuating event. For many, October 10th has become a symbol of distrust in the crypto market structure.
But not everyone agrees that Binance deserves the villain role.
“It's clear that 10.10 is not a 'software glitch,'” Evgeny Gevoy, CEO of market maker Wintermute, wrote on X. “It was a flash crash in a hugely leveraged market on a Friday night with no liquidity due to macro news.”
He added: “It's easy to find a scapegoat, but it's intellectually dishonest to blame this on one interaction.”
The argument is simple. Cryptocurrencies are still structurally highly leveraged and liquidity is often conditional. Market makers will widen their spreads or pull back completely when they are stressed. Liquidation accelerates in thin trading.
Binance may have been the biggest venue for the crash, but that didn't necessarily cause the shock.
Transparency gap creates speculation
What's missing is a public review and official explanation. Critics say the lack of detailed research leaves room for speculation to snowball.
Former U.S. Commodity Futures Trading Commission (CFTC) regulator Salman Banaei threatened to issue a search warrant on October 10, despite not alleging wrongdoing.
“Whether you like cryptocurrencies or not, there should be a regulatory investigation on October 10, 2025,” Banaei wrote, comparing it to the stock market flash crash of May 6, 2010. “The benefit of regulation is that the risk of such an investigation deters manipulation.”
He noted that he did not allege that manipulation had taken place. But the broader point is that crypto markets lack the formal post-mortem that traditional finance relies on after systemic shocks.
One trader known as Flood suggested that major exchanges have been “relentlessly selling altcoins since October 10th,” fueling a conspiracy theory about overstock.
Regardless of whether they are true or not, such claims tend to flourish when liquidity erodes and trust erodes.
The more serious problem is the depth of the market, not a single exchange
October 10th may ultimately be remembered for what was revealed about market structure rather than the number of liquidations.
In a bull market, the order book is thick, leverage is quietly increasing, and liquidity is plentiful.
A bear market reveals the opposite. Liquidity thins, market makers retreat, volatility concentrates, and the next shock breaks through sooner than expected.
“This looks much worse than the post-FTX situation. In some ways the fundamentals are stronger than ever, but the price action is zero bidding,” Ether.fi CEO Mike Shiragadze wrote in X, referring to the collapse of crypto exchange FTX in 2022.
Binance is the easiest scapegoat because it is the largest exchange and therefore the most visible and obvious target.
But the deeper problem is structural. Cryptocurrency liquidity still relies on leverage, conditional market making, and trust, all of which has been eroded over the past four months.
“I don't know if Binance played a role in deliberately destroying the market in October, but I would probably lean toward the obvious: high leverage, low liquidity, and generally useless or undesirable altcoin 'technology' is a recipe for carnage, and that's exactly what happened,” said Eric Crown, a former options trader at NYSE Arca.
“It was always a question of when, not if.”
