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

Mass Liquidations, Exchange Glitches, and BNB’s Unshaken Rally Define a Turbulent Week in the Crypto Market

TL;DR:

• Around $19–20 billion in crypto positions were liquidated within 24 hours amid widespread exchange disruptions and transparency concerns.
• Hyperliquid’s co-founder accused major CEXs, including Binance, of underreporting liquidations by as much as 100x.
• Despite the chaos, BNB soared ~16% to a record $1,370, cementing its dominance in the global crypto price index.

Massive liquidation waves rippled through the crypto market between October 10 and 11, erasing roughly $19–20 billion in leveraged positions and sparking outrage across trading communities over how centralized exchanges reported the carnage. Hyperliquid co-founder Jeff Yan publicly accused several CEXs, including Binance, of “dramatically underreporting” liquidation data, claiming some platforms logged a single event even when thousands occurred simultaneously. He said this practice could lead to “100x underreporting” during peak volatility, contrasting it with Hyperliquid’s on-chain transparency, where every liquidation is publicly traceable.

Amid the fallout, traders reported outages lasting nearly an hour on Binance as markets collapsed, leaving many unable to close positions. Hyperliquid, meanwhile, handled up to $70 billion in volume with no downtime. The criticism quickly drew the attention of Changpeng Zhao (CZ), who defended Binance’s performance and praised BNB Chain ecosystem members for “taking hundreds of millions from their own pockets to protect users,” stressing that such intervention reflected “different value systems.”

Panic deepened when Binance’s mobile app briefly displayed Bitcoin and Ether prices as zero, triggering social-media speculation of a systemic failure. Binance later clarified it was a UI latency issue, not an actual price collapse, emphasizing that tokens “did not crash to zero.” To address fallout from collateral depegs and forced liquidations, Binance announced a $283 million compensation plan for users affected between October 10 at 21:36 UTC and 22:16 UTC, covering positions collateralized by USDe, wBETH, and BNSOL. Refunds are calculated by comparing each user’s liquidation price with the market price at 00:00 UTC on October 11, including associated liquidation fees.

While the crypto price slide appeared indiscriminate, BNB proved an anomaly. The token briefly dipped only 2–3% during the crash, with some tracking sites showing a deeper 17% drawdown before an aggressive rebound that catapulted it 16% higher to fresh all-time high of $1,370 by October 13. Trading volume surged more than 70%, and BNB futures open interest jumped 34% to roughly $2.65 billion, lifting its coin market cap back above $1.1K billion-class levels, overtaking XRP to reclaim the third-largest spot globally.

CZ denied that any entity tied to him or Binance was propping up the price, insisting BNB’s resilience stems from its deflationary burns, fee-discount utility, and a robust ecosystem that channels exchange revenue back into network support. “BNB has no market maker linked to me,” he said, reaffirming that strength came from “community and infrastructure, not intervention.”

The chaos also spotlighted collateral stability issues after Ethena’s USDe fell to $0.65 on Binance while trading near parity elsewhere. Ethena founder Guy Young clarified that it was “not a true depeg,” noting Bybit’s USDe dipped only 5% and Kraken’s by less than 1%. He blamed Binance’s internal pricing logic for amplifying the decline and warned that using venue-specific marks for collateral could trigger unnecessary liquidations. “It’s not accurate to call it a USDe depeg when a single venue was out of line with the deepest pools of liquidity,” Young said, confirming over $2 billion in mint-redemption activity within 24 hours and more than $9 billion in total collateral still redeemable.

Some analysts framed the crash as an exploit of Binance’s Unified Account margin system, which prices wrapped or derivative assets using Binance’s own spot rates instead of external oracles. Uphold’s research head, Dr. Martin Hiesboeck, described it as a “targeted attack” timed between a system patch announcement and its rollout, comparing it to “Luna 2.0.” Others attributed the episode to macro stress — tariff news hitting equities and over-leveraged traders — rather than manipulation. Binance later said it would overhaul its pricing logic for wrapped assets and continue compensating verified users affected within the impacted window.

Hours before the liquidation cascade began, on-chain analysts flagged a transfer of roughly 1,066 BTC from Coinbase to Binance, sparking widespread speculation that large inflows may have amplified market pressure. While no evidence confirmed coordinated manipulation, traders on social media linked the movement’s timing to the initial sell-offs that triggered cascading liquidations.

The debate over data transparency lingers. CZ shared charts suggesting Binance’s liquidation ratios were lower than many DEXs, implying that risk systems worked as intended. Hyperliquid’s Yan maintained the issue was reporting granularity, not totals, arguing that real-time visibility into liquidation flows matters for assessing systemic risk.

By the end of the week, Binance’s communication strategy and BNB’s defiant rally overshadowed much of the panic. Market observers noted that while transparency concerns remain unresolved, the exchange’s quick restitution move and the token’s strong fundamentals restored confidence among retail and institutional traders watching the crypto price index recover from its steepest wipeout of 2025.

This happened as the White House is reportedly considering a pardon for Changpeng Zhao, who pleaded guilty in November 2023 to violating the Bank Secrecy Act amid regulatory crackdowns on cryptocurrency. Proponents argue that his conviction was influenced by broader enforcement actions against the crypto industry. 

A pardon could clear Zhao’s felony record, potentially facilitating regulated investments and alleviating state restrictions on Binance's U.S. operations. Zhao expressed optimism about the situation on social media. Neither the White House nor Zhao’s attorney, Teresa Goody Guillen, have officially commented on the pardon discussions.

This article has been refined and enhanced by ChatGPT.