Binance '10/11 Flash Crash' Post-Mortem: Denies Systemic Failure, Has Compensated Affected Users Over $328 Million

BlockBeats News, January 31st. According to an official announcement, on October 11, 2025, the crypto market experienced severe volatility and a "flash crash." Binance stated that this market turmoil was mainly triggered by macroeconomic shocks, concentrated liquidation of high leverage positions, liquidity contraction due to market maker risk control, and Ethereum network congestion, rather than platform-wide failures.

Binance stated that during extreme market conditions, the core matching engine, risk checks, and settlement systems remained operational without experiencing a complete outage or interruption. The cascading liquidations mainly occurred at the onset of macro risk shocks, where high leverage positions were deleveraged in a rapidly shrinking liquidity environment.

From a macro perspective, on that day, global financial markets experienced a widespread decline, with the U.S. stock market losing approximately $1.5 trillion in market cap. The crypto market had been on a continuous uptrend for several months, with open derivative contracts at historical highs, making it particularly sensitive to shocks. Simultaneously, extreme volatility triggered market maker algorithmic risk controls, causing a significant drop in order book liquidity within a short period, amplifying price fluctuations.

Binance further disclosed the results of two platform-related technical event investigations:

Asset transfer sub-system performance degradation (05:18–05:51, UTC+8): Under high-concurrency pressure, some user fund transfers were delayed, with a few accounts briefly displaying a "balance of 0" issue, though no asset loss occurred.
USDe, WBETH, BNSOL index brief deviation (05:36–06:15, UTC+8): Amid liquidity shortages and on-chain congestion, the index weighting and outlier filtering mechanisms were magnified, leading to a temporary deviation.

Binance stated that the above issues occurred after the most severe market turbulence, with approximately 75% of liquidations on that day happening before the relevant token deviations, thus not the primary cause of the flash crash. In response to the events, the platform has completed system optimizations and compensated eligible affected users.

As of October 22, 2025, Binance has fully compensated users, with a total amount exceeding $328 million. Additionally, on October 14, Binance launched the "Same Boat Plan," establishing a $3 billion user assistance fund and providing an additional $1 billion in low-interest loans to support the stable operation of the ecosystem and institutional clients.