Binance explains market crash and reimburses users $283 million

Users affected by collateral liquidations, Earn products and transfer delays received a full refund within 24 hours.

Binance announced that it has compensated affected users with approximately $283 million following the recent October 10 market crash.

The company also said that the situation was caused by a brief technical glitch on the same day that resulted in temporary disruptions and the disconnection of some cryptocurrencies.

What really happened during the crash

On October 12, the exchange released a statement explain the extreme price swings that occurred after global economic events led to heavy sell-offs in the cryptocurrency market.

The crash sent traders into panic selling on several platforms, leading to more than $7 billion in liquidations in the first hour. As a result, Bitcoin, Ethereum, and other major digital assets fell, while synthetic tokens like USDE and BNSOL lost their pegs.

However, Binance said it had compensated affected users within 24 hours and later determined that its platform played only a minor role in the overall decline.

“The forced liquidation volume processed by the Binance platform represented a relatively low share of total trading volume, indicating that this volatility was primarily driven by general market conditions,” the company said.

Customers who lost money due to collateral liquidations were fully reimbursed, while customers affected by delays in internal transfers or redemptions of Earn products will also receive refunds.

In total, the crypto giant paid out $283 million to users affected by the disconnection of its Earn products linked to USDE, BNSOL and WBETH. It also made it clear that the crash occurred before the peg disruption, and not because of it.

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“The extreme market decline occurred before the decoupling. Data shows that during the market sell-off, prices fell to their lowest point between 2025-10-10 21:20 and 21:21 (UTC), while the severe decoupling occurred after 21:36 (UTC) on the same day,” the statement said.

Binance tackles sudden price drops

There are also concerns about sudden price drops in some spot trading pairs. Binance claimed it had conducted studies showing that the declines occurred when old limit orders, some of which had been placed as far back as 2019, were triggered during the sell-off at a time when there were very few buy orders. This caused brief moments where certain token prices took a nosedive before returning to normal levels.

The statement also explained that the “zero price” seen in pairs such as IOTX/USDT was a display issue caused by recent changes to the number of decimal places allowed for price movements.

Binance said it is now fixing the user interface and improving its systems to prevent similar issues in the future. The company confirmed that its API was not affected during the incident and emphasized its commitment to transparency and continuous system improvements.

Friday’s market dip is now considered the largest liquidation event in cryptocurrency history. Following President Trump’s threat of a 100% tariff on Chinese technology imports, the event wiped out more than $19 billion in leveraged positions within 24 hours, impacting more than 1.6 million traders worldwide.

The incident wiped out nearly $1 trillion in market capitalization within three hours, with analysts noting that the size of the selloff surpassed previous collapses such as Terra Luna and FTX.