The October 11th Crypto Crash: What Really Happened

Approximately $60–90 million worth of USDe was dumped on Binance, along with wBETH and BNSOL, to exploit a vulnerability in the pricing system where collateral was valued based on Binance's own order book data rather than external oracles.

This local price deviation triggered forced liquidations of $500 million to $1 billion, ignited a cascade of over $19 billion across the entire market, and netted the attackers approximately $192 million in profit thanks to pre-opened short positions (worth $1.1 billion) on BTC/ETH on Hyperliquid—just minutes before the news about Trump's tariffs broke.

This was not a failure of USDe—the problem was a flaw in Binance's system that was exploited amidst the noise of macro panic.

What looked like chaos was, in fact, a planned exploitation of Binance's internal pricing system, amplified by a macro shock and excessive leverage within the system.

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As part of its Unified Account feature, Binance allowed the use of USDe, wBETH, and BNSOL as collateral.

However, the valuation was based not on oracles or redemption prices, but on Binance's own spot quotes, which became a critical vulnerability.

On October 6, Binance announced a planned transition to oracle-based pricing, but the implementation was scheduled only for October 14, leaving an eight-day window for an attack.

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During this window, well-organized actors began manipulating the Binance order book, dumping around 60–90 million USDe, which caused its price on Binance to drop to $0.65, while it remained around $1 on other exchanges.

Since Binance's collateral system used its internal prices, this instantly wiped out margin and triggered forced liquidations of $500 million to $1 billion.

Then, news broke about Trump's proposed 100% tariffs on China, intensifying the panic and liquidity issues.

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On the same day, new wallets on Hyperliquid opened $1.1 billion in short positions on BTC and ETH, funded with 110 million USDC from sources linked to Arbitrum.

When the liquidation cascade on Binance crashed BTC and ETH prices, these positions yielded approximately $192 million in net profit after being closed at the bottom.

The timing, precision, and funding channels point to coordinated action.

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The liquidations on Binance led to mass selling of BTC, ETH, and altcoins on thin order books.

Other exchanges began mirroring the decline through bots and cross-market arbitrage algorithms.

Market makers, hedging across multiple venues, were forced to offload positions everywhere.

The result: over $19 billion in global liquidations, with many altcoins falling 50–70% in a single day—all triggered by less than $100 million in manipulated collateral.

Who is to blame?

• Binance: The flawed architecture and delayed oracle implementation are the root cause. •The Attackers: They orchestrated and synchronized the manipulation, profiting from external shorts. •Ethena (USDe): Not at fault. The protocol remained fully collateralized, redemptions functioned normally, and the peg held at 1:1 on all other platforms.

Aftermath

Binance acknowledged "technical issues on the platform," promised compensation for affected users (margin, futures, and loan accounts), and implemented minimum price thresholds and oracle integration.

USDe continued to operate without disruptions, and the incident became a clear case study of how an error in an exchange's pricing system can trigger cascading liquidations across the entire market.