Roughly $19 billion in leveraged positions were liquidated across the crypto market on Oct. 11, 2025, in what the article describes as the largest one-day wipeout on record for the industry. One year later, the event still hangs over the market, and the argument over what caused it, who should pay, and how much has not gone away.
The latest round began on Oct. 12, when OKX CEO Star Xu reposted a recent interview clip of Changpeng Zhao, widely known as CZ, and asked on X who the “Yue Buqun of crypto” was, referring to a fictional hypocrite from Jin Yong’s martial arts novels. In that interview, CZ said Binance had paid about $800 million to compensate affected users and that the exchange had no obligation to do so.
That reopened a question that, according to the article, has never received a full public answer over the past year: what exactly that money covered, and how much damage was left outside the payout scope.
A fresh clash over Binance’s $800 million compensation claim
CZ’s recent interview carried three main points. He said Binance compensated users for about $800 million, that the exchange was not required to pay that money, and that outside observers kept focusing on negative Binance headlines even as the platform continued to record net inflows during the controversy. He also said community narratives could be manipulated and that capital flows were a better measure than online noise.
Star Xu rejected the framing the same day in a series of posts on X. He argued that describing the payout as voluntary was wrong because the crash caused tens of billions of dollars in damage across the market, and that such compensation should not be used as a self-congratulatory talking point. He traced the issue back to Binance’s September promotion of a high-yield USDe product.
Binance co-founder Yi He responded afterward. She said the exchange’s later “Together Plan” was funded with Binance’s own money. She also suggested that some platforms profit from wick events caused by system behavior, then shift the blame to Binance after problems emerge, and said rival exchanges had manipulated media coverage and pushed fake news for years.
On Oct. 13, CZ posted an unnamed message of his own, saying that paying to spread FUD and smear competitors only damages trust in one’s own exchange.
The dispute reaches back to January 2026
The article traces this fight back to January rather than October.
On Jan. 26, 2026, ARK Invest CEO Cathie Wood told Fox Business that the crypto market had been living through the aftershocks of the “10/11” crash for the prior two to three months. She linked the flash crash to a Binance software failure and said the forced deleveraging was around $28 billion, while noting that the more common market figure was about $19 billion.
Wood also explained why Bitcoin appeared to take the hardest hit. In her telling, it was the most liquid asset in the market, so when large-scale leveraged positions were unwound, the deepest market was hit first. Her broader view at the time was still constructive: she said deleveraging had largely run its course and that Bitcoin could build a base in the $80,000 to $90,000 range. She added that infrastructure reliability remains a core concern for professional investors making long-term allocations, including through ARK’s spot Bitcoin ETF, ARKB.
The article says this was the first time a well-known figure from traditional finance had directly pointed at Binance on mainstream television.
That remark appears to have opened the floodgates. Beginning on Jan. 28, English-language KOLs and traders sharply criticized Binance and CZ, questioning the exchange’s system stability, risk controls and the chain reaction tied to the crash. The article says some called CZ a “fraud” and said his public image had collapsed.
On Jan. 30, CZ said during an AMA that the “10/11” event was not caused by a Binance system problem, that affected users had already been compensated, and that the wave of criticism was an organized campaign run by competitors using paid posters. On the same day, Binance said it would move its $1 billion Secure Asset Fund for Users, or SAFU, from stablecoins into Bitcoin within 30 days.
Different explanations for what caused the crash
Binance’s own post-mortem attributed the event to a combination of factors. As summarized in the article, Bitcoin derivatives open interest had already exceeded $100 billion when Donald Trump announced a 100% tariff increase on Chinese goods. At the same time, market makers pulled depth, the Ethereum network became congested, and liquidations cascaded. Binance also said about 75% of liquidations happened before the relevant index dislocations in three assets.
Star Xu publicly named Binance for the first time that same day. He said the “10/11” crash was not an accident but the result of Binance’s September marketing push around a high-yield USDe product. According to his argument, the product offered an annualized yield of about 12% during the promotion period, users borrowed against USDe and added to positions, leverage looped through the system, and once USDe lost its peg, liquidations cascaded. He described the product as carrying hedge-fund-level risk.
Not everyone in the industry agreed with him.
- Ethena founder Guy Young said there had never been any special automatic deleveraging, or ADL, arrangement with any exchange.
- Dragonfly managing partner Haseeb Qureshi said the claim that Binance and Ethena caused the crash did not hold up on timeline or distribution path.
- Wintermute founder Evgeny Gaevoy said his reading was that the move looked like a macro-driven flash crash.
- The article also notes that Star Xu is a competitor, and his comments should be read with that in mind.
On Feb. 27, X showed that CZ had unfollowed Cathie Wood. In May, the two appeared together in a podcast conversation, where Wood clarified her January comments. She said Binance did not trigger the flash crash. Instead, a system failure appeared after the market had already fallen, and that failure amplified fragility that had been exposed by tariff-driven panic. She did not withdraw the claim that there had been a failure. What she changed was causality: the failure was a consequence of the crash, not its cause.
CZ replied that Wood’s earlier remarks had been widely quoted by the media and had led many people to say Binance caused the collapse, and that he was glad she had now clarified the record.
Where Binance drew the line on compensation
If the issue is measured by Binance’s own rules, the exchange did draw a line.
The first compensation tranche totaled $283 million and went to users who were liquidated because USDe, BNSOL and WBETH depegged. Binance said in its report that the indexes for those three assets relied too heavily on Binance’s own order books and were not sufficiently anchored to the prices of the underlying assets. It also said outlier protections were not strict enough when liquidity was thin. USDe briefly fell to about $0.65 on Binance, according to the article.
The payout window was narrow and explicit. Users who held those three assets as collateral and were liquidated between 05:36 and 06:16 on Oct. 11, 2025 were eligible to receive the difference between their liquidation price and the market price at 08:00 on Oct. 11, with fees refunded as well.
Losses caused purely by market volatility, along with unrealized profits, were excluded.
That brings the discussion back to Binance’s own figure that about 75% of liquidations took place before that window. Under that framework, compensation depended on which segment of the event Binance classified as its own problem. The earlier and larger part of the liquidation wave was treated as market behavior instead.
Who received the money
The article breaks Binance’s compensation into several buckets.
- More than $328 million went to users affected by degraded performance in the asset transfer subsystem and to users liquidated because of the depegs in USDe, BNSOL and WBETH.
- A $400 million “Together Plan” had two parts.
- A $100 million low-interest loan program was aimed at heavily affected institutions and ecosystem traders, and those funds had to be repaid.
Within the $400 million “Together Plan,” $300 million was allocated to a “User Seed Plan.” Under that program, selected affected users received USDC based on their losses and loss ratios, with amounts randomly ranging from 4 USDC to 6,000 USDC.
Eligibility required that a futures or margin position had been liquidated between 08:00 on Oct. 10, 2025 and 07:59 on Oct. 12, 2025, that the loss was at least $50, and that the liquidation loss accounted for more than 30% of account net assets, using a snapshot taken at 07:59 on Oct. 10. Users who had already received the earlier compensation were not eligible for this program.
In total, the disclosed support exceeded $728 million, but $100 million of that amount consisted of loans that had to be repaid.
The cap of 6,000 USDC per person under the seed plan became a separate source of frustration. X user @puregamm said one Binance account of his was liquidated for more than $4 million. He questioned why users whose collateral depegged received compensation while contract traders ended up with only a few thousand dollars’ worth of USDC. He also posted that he and other market makers had lost millions because Binance’s API failed to accept orders.
That post was later deleted. He then said Binance’s technical team had provided complete logs showing that his deleveraging order had never returned a 503 error. Some people suspected Binance had privately compensated him in exchange for removing the post. He denied that and said he received only the standard one-time payment under the “Together Plan.”
Formal complaints were handled through a different process. Yi He said on X on Oct. 11 that users who believed Binance had caused their losses could contact customer service, and the exchange would review account behavior before making a determination. The article says Binance has never publicly disclosed the outcomes of those individual cases.
That fed another claim in the market: that Binance privately negotiated compensation with KOLs and did not want those who were paid to keep talking about it on X.
CZ said this round of criticism was organized by competitors and argued that “community narratives can be bought.” Yi He, in her response to Star Xu, also accused rival platforms of manipulating media coverage and producing fake news. Both sides accused the other of shaping public opinion.
The question of bankrupt positions and exchange gains
Another long-running market theory tied to the “10/11” crash is that Binance may have taken over some bankrupt positions during the extreme move, then profited when prices rebounded and used those gains to compensate users.
The article says the first step in assessing that theory is to ask whether exchanges actually have a mechanism for taking over bankrupt positions and absorbing later profit and loss.
According to Binance’s public futures liquidation rules, when a liquidation order cannot be fully filled and the remaining position enters bankruptcy, the futures insurance fund can take over the position within a certain range. Related losses are borne by the insurance fund, while later gains also flow back into that fund. If the fund is not enough to cover the risk, ADL may be triggered.
On the rules alone, then, the idea that bankrupt positions can be taken over is not baseless speculation.
Still, the article says liquidation statistics have limits. In October 2025, Hyperliquid founder Jeff Yan said Binance’s public API only pushes the latest liquidation order for each trading pair once per second. During clustered liquidation events, public figures could be far below the actual number of liquidations. He said the gap could in some cases reach 100x.
That observation suggests public liquidation data may not fully reconstruct the scale of the event. It does not prove that Binance hid any specific amount of positions, nor does it show how much profit, if any, the platform made from those positions.
In the January 2026 AMA, CZ denied that Binance or he personally manipulated prices through trading or profited from the crash. He also said Binance had compensated users affected by platform issues. The article describes that as Binance’s public response, but not a substitute for verifying the actual positions involved and the movement of funds.
One year later, the key issues remain unresolved
One year after the “10/11” crash, the argument among CZ, Star Xu and Yi He is still running.
Binance has acknowledged some platform issues and published compensation and support programs. At the same time, it continues to argue that macro shocks and market-wide deleveraging were the main drivers of the sell-off. Star Xu has continued to question whether the high-yield product, collateral settings and risk controls amplified the damage.
The article’s conclusion is that both sides still need harder evidence.
To determine how much responsibility Binance should bear, several categories would need to be separated and calculated independently: losses caused by broader macro market moves, additional losses caused by platform failures, and any impact magnified by product design and risk settings. The amount of compensation alone shows how much money the platform put out, but does not by itself establish the size of its liability. By the same logic, total market liquidation volume does not directly show how much any one exchange should be responsible for.
The final question in the piece is about user verification. When an exchange controls the order books, index pricing, liquidation data and the interpretation of compensation rules, what can users rely on to verify their own losses? If another extreme market event occurs and users believe platform failures worsened their losses, would they be able to demand explanations under a public and verifiable set of rules, or would they once again have to wait for the exchange to decide on its own which losses deserve compensation?
The article ends with a disclaimer that the content is for reference only and does not constitute investment advice.
