Binance says October flash crash driven by macro liquidations

Binance has rejected claims that an internal systems failure caused the October crypto flash crash, pointing instead to macroeconomic shocks and market structure dynamics.

The exchange said the sell-off reflected a broader risk-off event that affected both digital assets and traditional financial markets at the same time.

In a blog post published on January 30, Binance argued that heavy leverage, thin liquidity, and automated risk controls combined to amplify price moves.

“On October 10, 2025, the crypto market faced a macro shock. While some placed the blame on a Binance glitch, the reality was that cascading liquidations were driven by macro risks from highly leveraged positions, market makers’ risk controls limiting liquidity, and Ethereum network congestion delaying transfers,”

Binance said.

The company explained that trade-war headlines triggered a global pullback after months of rising asset prices and expanding derivatives exposure.

Binance noted that open interest across bitcoin futures and options had climbed above $100 billion, leaving the market highly sensitive to sudden volatility.

As prices began to fall, market makers reduced exposure through automated controls, which removed liquidity from order books and intensified declines.

According to the exchange, the shock was not limited to crypto markets but spilled into equities on the same day.

“The impact wasn’t confined to crypto: U.S. equity markets shed roughly $1.5 trillion in value that day, with the S&P 500 and Nasdaq enduring their largest single-day drops in six months and $150 billion in systemic liquidations,”

Binance added.

Binance stressed that the dislocation should be viewed as a systemic event rather than an exchange-specific breakdown.

“The October 10 dislocation was a systemic, macro-driven risk-off move. That said, we acknowledge that parts of the Binance platform experienced temporary strain under extreme market conditions and have compensated impacted users, and strengthened safeguards,”

The company said.

The exchange added that most forced liquidations occurred before a widely reported three-token depeg later in the session.

“With the highest-volatility window between 21:10–21:20 UTC, roughly 75% of the day’s liquidations had already taken place before the widely-reported three-token depeg occurred at 21:36 UTC,”

Binance stated.

Independent analysis from Kaiko and Amberdata suggested a localised pricing issue later worsened conditions on Binance.

The data showed that USDe briefly fell to $0.65 on Binance while holding near $0.99 on other venues during a short time window.

Binance said this discrepancy stemmed from the use of internal spot books during periods of severely thinned liquidity rather than global price aggregates.

The repricing temporarily affected collateral values within the platform’s unified account system and triggered a second wave of liquidations.

The exchange reported two contained incidents involving a slowdown in an internal transfer subsystem and short-lived index deviations.

Binance said both issues were resolved through infrastructure upgrades, tighter index methodology, and full user compensation.

According to the company, total compensation and related relief exceeded $328 million.

Binance concluded that its response demonstrated a proactive focus on users rather than an attempt to deflect responsibility.

At the time of reporting, Bitcoin price was $78,762.00.