Binance attributes the most significant liquidation day in cryptocurrency history to macroeconomic risks rather than a failure of the exchange itself.

Binance has stated that the crypto flash crash on October 10 was triggered by a macro risk-off shock, successive liquidations, and limited liquidity, while also recognizing two platform-specific problems that surfaced after most of the losses had already been realized.

Key points:

• Binance attributed the flash crash on October 10 to a macro-driven sell-off that coincided with significant leverage and diminishing liquidity, dismissing allegations of a fundamental failure within its trading system.
• The exchange indicated that over $100 billion in open interest for bitcoin derivatives and rapidly diminishing order books exacerbated cascading liquidations, while congestion on the blockchain and soaring Ethereum gas fees intensified fragmentation across trading platforms.
• Binance recognized two specific issues related to its platform, compensated users with over $328 million, and noted that approximately 75 percent of liquidations transpired before its index deviations, highlighting the broader market shock as the principal cause.

Binance attributed the October 10 flash crash to a macro shock intersecting with heavy leverage and diminishing liquidity, rather than any failure in its trading systems spurred by speculative rumors on social media.

In a report published on Saturday, the exchange explained that global markets were already under strain due to trade-war news when the crypto markets faltered. Bitcoin and ether had been on an upward trajectory for months leading into early October, leaving traders heavily invested and vulnerable.

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10/10’s myths and facts explained.

👉 https://t.co/SpE6scqpSx pic.twitter.com/OJhZESWlP4

— Binance (@binance) January 30, 2026

At that time, the open interest in bitcoin futures and options surpassed $100 billion, creating favorable conditions for forced deleveraging once prices began to drop, it noted.

The sell-off quickly became self-perpetuating. As prices fell, market makers implemented automated risk controls and decreased their exposure, extracting liquidity from order books. Data referenced by Binance, obtained from Kaiko, demonstrated that bid-side depth nearly disappeared on various major exchanges during the height of the move. With fewer resting orders available, even minor liquidations caused significant price declines.

The disruption was not confined to the cryptocurrency sector. U.S. equity markets experienced an estimated loss of $1.5 trillion that day, with the S&P 500 and Nasdaq recording their largest single-day declines in six months. Binance reported that around $150 billion in systemic liquidations occurred across worldwide markets.

Blockchain congestion compounded the pressure. Ethereum gas fees (the charges for on-chain transactions) surged above 100 gwei at times, hampering transfers and limiting arbitrage opportunities between platforms. With capital unable to shift rapidly, price discrepancies widened, and liquidity further fragmented.

Incidents related to Binance

Binance acknowledged two specific incidents during the crash but emphasized that neither contributed to the broader market movement.

The first incident involved a slowdown in its internal asset-transfer system between 21:18 and 21:51 UTC, impacting transfers between spot, earn, and futures accounts. While core trading systems remained functional, some users temporarily displayed zero balances due to backend timeouts.

Binance indicated that the problem arose from a database performance regression under high traffic conditions and has since been resolved. Users affected were compensated.

The second incident involved temporary index deviations for USDe, WBETH, and BNSOL between 21:36 and 22:15 UTC, after the majority of liquidations had already taken place. Binance stated that thin liquidity and delayed rebalancing across venues led to local price movements disproportionately impacting index calculations.

Methodology changes have since been enacted, and affected users were compensated.

Binance reported that approximately 75% of the day’s liquidations occurred prior to the index deviations, indicating that the initial macro shock was the main catalyst.

In total, the exchange stated it provided over $328 million in compensation to users and initiated additional support programs to stabilize those impacted by the crash.