Binance’s Crypto Crash: A Coordinated Attack?
A new report suggests the October 11 crypto market crash might not have been random.Wu Blockchain believes it was a targeted exploit on binance’s margin system.
attackers may have manipulated collateral assets like USDE, wBETH, and BnSOL. This caused their values to plummet, triggering mass liquidations. USDE fell to $0.65, wBETH to $0.20, and BnSOL to $0.13.
Wu Blockchain, a journalist, claims attackers exploited Binance’s margin system. They targeted specific assets, causing their values to crash. This led to widespread liquidations on the exchange.
The timing was crucial. It happened between Binance’s announcement of an oracle price adjustment and its implementation. This window provided attackers with a chance to act.
The 24-hour spot trading volume for the affected assets reached $3.5-4 billion. Estimated losses are between $500 million and $1 billion.
The issue stemmed from Binance’s unified margin design. it allowed PoS derivatives and yield-bearing stablecoins as collateral. Liquidation prices were based on Binance’s spot order book, not hard-pegged values.
As Bitcoin and altcoins fell, derivatives traders faced losses. Coin-margined positions suffered more due to severe collateral depegging. Market makers were forced to liquidate holdings,amplifying the crash.
USDE faced additional selling from binance’s 12% yield program.This encouraged large stablecoin holders to borrow recursively,magnifying the damage.
Investor Mindaoyang noted similarities with the LUNA collapse. Both incidents involved non-fiat stablecoins as high-collateral assets on Binance, causing them to crash in value, which then triggered mass liquidations across the exchange.
The attack targeted USDE, wBETH, and BnSOL, which saw extreme depegging, with USDE falling to $0.65, wBETH to $0.20, and BnSOL to $0.13.
The timing coincided precisely with a window between Binance’s October 6 announcement of an oracle price adjustment and its scheduled implementation on October 14. This provided attackers with a clear chance.
The 24-hour spot trading volume for the three affected assets reached $3.5-4 billion on binance, with estimated realized losses between $500 million and $1 billion that the exchange may need to cover.
Unified margin design amplified cascade liquidations
The vulnerability stemmed from Binance allowing PoS derivatives and yield-bearing stablecoins as unified margin collateral, with liquidation prices derived from Binance’s own spot order book rather than hard-pegged values.
While BUSD remained hard-pegged and Aave oracle data for USDE stayed at 1:1 on-chain, preventing large-scale liquidations elsewhere, Binance’s internal pricing mechanism created isolated vulnerability.
As bitcoin (BTC) and altcoins fell sharply, derivatives traders faced mounting losses. For coin-margined positions, declining coin prices combined with severe collateral depegging further eroded margin values.
Market makers using these assets as margin were forced to close all positions and liquidate holdings, amplifying the downward pressure.
USDE faced additional selling from Binance’s 12% yield program, which encouraged large stablecoin holders to engage in recursive borrowing, magnifying damage from the targeted attack.
USDE spot prices on Binance plunged far below levels on othre centralized exchanges, moast of which stayed above $0.90.
Similarly, some
