Binance Under Scrutiny After Historic $19B Crypto Liquidation on October 10

The $19 billion crypto liquidation on October 10 initially appeared to be another routine market shakeout, as bitcoin plunged sharply and leveraged positions were rapidly wiped out across major exchanges. However, what followed has turned the event into the largest and most controversial single-day liquidation in crypto history, reshaping trader confidence and market structure. At the center of the debate stands Binance, the world’s largest cryptocurrency exchange.

Bitcoin dropped as much as 12.5% that day, its steepest decline in over a year, triggering forced closures of highly leveraged trades. While liquidations are common during volatile periods, the scale of the October 10 crash, often referred to as “10/10,” and the lack of a clear, transparent explanation have left traders frustrated. Many market participants argue that Binance’s dominance in crypto derivatives amplified the impact, even as the exchange denies responsibility and maintains that its systems functioned normally.

In the months since the crash, crypto market liquidity has noticeably deteriorated. Order books remain thin, bid-ask spreads are wider, and market depth has not fully recovered. Traders say these conditions contributed to bitcoin’s subsequent decline from near $125,000 to around $80,000, reinforcing concerns about structural fragility in digital asset markets. Ark Invest CEO Cathie Wood reignited the controversy by attributing bitcoin’s weakness to a “Binance software glitch,” a claim Binance has firmly rejected.

Binance leadership, including co-founder Changpeng “CZ” Zhao, insists the crash was driven by macroeconomic pressures, excessive leverage, low liquidity, and network congestion rather than internal failures. The exchange stated it paid approximately $283 million in compensation to affected users, though critics argue this amount pales in comparison to the overall losses.

Industry voices remain divided. Some market makers and analysts argue that blaming a single exchange oversimplifies the issue, pointing instead to crypto’s reliance on leverage and conditional liquidity. Others call for regulatory investigations, noting that traditional financial markets conduct formal post-mortems after flash crashes.

Ultimately, October 10 exposed deeper vulnerabilities in crypto market structure. Whether or not Binance played a direct role, the event highlighted how thin liquidity, high leverage, and eroding confidence can combine into a perfect storm, making such a collapse feel inevitable rather than accidental.