Binance Faces Scrutiny Over Transparency as BNB Surges to All-Time High After $20B Market Liquidation

Binance Faces Outages During the Crypto Crash

Binance also faced criticism after traders reported outages during the sharp market decline.

Some users said they were unable to close positions for nearly an hour. Hyperliquid, meanwhile, reportedly processed as much as $70 billion in trading volume without downtime during the period.

Former Binance CEO Changpeng Zhao, known as CZ, defended the ecosystem's response.

He praised members of the BNB Chain ecosystem for “taking hundreds of millions from their own pockets to protect users,” saying the response reflected “different value systems.”

Why Did Binance Show Bitcoin and Ether at $0?

Another problem emerged when Binance's mobile application briefly displayed Bitcoin and Ether prices at zero.

The screenshots quickly spread across social media and fueled speculation about a larger technical failure.

Binance said the cryptocurrencies had not actually fallen to zero. The exchange attributed the display to a user-interface latency problem.

The issue added to concerns among traders already dealing with extreme price swings and forced liquidations.

Binance Announces $283 Million Compensation Plan

Binance later announced a $283 million compensation program for users affected by collateral depegs and forced liquidations.

The program covers certain positions backed by:

• USDe
• wBETH
• BNSOL

Eligible liquidations occurred between 21:36 UTC and 22:16 UTC on October 10.

Binance said refunds would compare users' liquidation prices with market prices at 00:00 UTC on October 11. Related liquidation fees would also be included.

USDe Falls to $0.65 on Binance

Collateral pricing became another major issue during the crash.

Ethena's USDe fell as low as $0.65 on Binance, even though the asset remained much closer to its target value on other exchanges.

Ethena founder Guy Young said the move was “not a true depeg.”

According to Young:

• USDe declined about 5% on Bybit.
• It fell less than 1% on Kraken.
• More than $2 billion in minting and redemption activity occurred within 24 hours.
• More than $9 billion in collateral remained redeemable.

Young argued that Binance's internal pricing system amplified the decline.

“It's not accurate to call it a USDe depeg when a single venue was out of line with the deepest pools of liquidity.”

The episode raised questions about using exchange-specific prices to calculate collateral values during periods of extreme volatility.

Was Binance's Margin System Exploited?

Some market participants argued that the event involved more than a typical liquidation cascade.

One theory focused on Binance's Unified Account margin system. Critics claimed its use of internal spot prices for some wrapped and derivative assets created vulnerabilities during sharp market moves.

Uphold research head Dr. Martin Hiesboeck described the event as a “targeted attack” and compared it with “Luna 2.0.”

Others rejected the manipulation theory and pointed instead to:

• Tariff-related macroeconomic concerns
• Falling equity markets
• Heavy crypto leverage
• Cascading forced liquidations

No evidence cited in the report confirmed coordinated market manipulation.

Binance later said it would change its pricing methodology for wrapped assets and continue compensating verified users affected during the specified period.

Bitcoin Transfer Adds to Market Speculation

Hours before the liquidation wave, onchain analysts flagged a transfer of about 1,066 BTC from Coinbase to Binance.

The timing attracted attention because large exchange inflows can sometimes precede selling activity.

Some social-media users linked the transfer to the subsequent sell-off. However, no evidence cited here established that the transaction caused the crash or formed part of coordinated manipulation.

BNB Defies the Crypto Market Crash

While much of the crypto market fell, BNB recovered quickly.

The token initially declined during the crash but then surged roughly 16%, reaching a new all-time high of $1,370 on October 13.

Trading activity also increased:

• BNB trading volume rose more than 70%.
• Futures open interest climbed 34%.
• BNB futures open interest reached roughly $2.65 billion.
• BNB overtook XRP in market capitalization during the rally.

The rally triggered speculation that entities connected with Binance or CZ were supporting the token's price.

CZ denied those claims.

“BNB has no market maker linked to me,” he said.

He attributed BNB's performance to factors including token burns, fee-related utility, and activity within the BNB Chain ecosystem.

Crypto Exchanges Face a Transparency Test

The October liquidation event left the market debating how centralized and decentralized exchanges report risk.

CZ shared data suggesting Binance recorded lower liquidation ratios than several decentralized exchanges.

Yan argued that the bigger problem was reporting granularity, not simply total liquidation values. He said detailed, real-time liquidation information is important for understanding systemic market risk.

That debate remains unresolved.

The episode nevertheless highlighted several weaknesses that become more visible during periods of extreme volatility:

• Exchange downtime
• Incomplete liquidation data
• Collateral pricing differences
• UI failures
• Heavy leverage
• Dependence on venue-specific market prices

For traders, the events of October 10–11 showed that exchange infrastructure can become a major source of risk when markets move rapidly.

CZ Pardon Reports Add Another Binance Storyline

The market turmoil came as reports said the White House was considering a pardon for Changpeng Zhao.

Zhao pleaded guilty in November 2023 to violating the Bank Secrecy Act.

Supporters of a pardon argued that his prosecution formed part of a broader regulatory crackdown on the cryptocurrency industry.

At the time covered by the report, neither the White House nor Zhao's attorney, Teresa Goody Guillen, had officially confirmed the reported pardon discussions.