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Crypto Crash Triggered By Binance Margin Exploit, Uphold Research Chief Claims
A significant crypto sell-off occurred on October 10-11, wiping out around $19-20 billion in market value within 24 hours. The event sparked debate on whether market structure flaws or malicious intent caused the cascade of liquidations. Dr. Martin Hiesboeck alleged a targeted attack exploited a flaw in Binance's margin system. The attack reportedly used assets like USDe, wBETH, and BnSOL as collateral, whose liquidation prices relied on Binance's volatile spot market. These assets depegged on Binance, triggering liquidations and causing a domino effect. Binance acknowledged the price dislocations and committed to compensating affected users. The exchange is compensating users impacted by the depeg of USDE, BNSOL, and WBETH. Binance also announced risk control enhancements following the incident. The crash was preceded by a macro shock triggered by tariff threats from the US, affecting the stock market and crypto. One perspective is that the problem wasn't an attack but poor design with immediate liquidation. Ethena's team, associated with USDe, believed the issue was localized to Binance's pricing. The total crypto market cap had begun to recover by the time of this analysis.
