October 11 crypto crash may have been a coordinated hit on Binance, says Colin Wu

The October 11 crash that wiped billions from the crypto market may not have been an ￰0￱ appeared to be a planned strike aimed straight at Binance and one of its biggest market makers, according to analysis from Colin ￰1￱ weak spot was Binance’s Unified Account margin system, which let traders use certain volatile assets as ￰2￱ design flaw gave attackers a clear target, and they hit it ￰3￱ of sticking to standard USDT or coin-margined positions, Binance allowed traders to post proof-of-stake derivatives and yield-bearing stablecoins as ￰4￱ three assets that took the worst hits were USDE, wBETH, and ￰5￱ liquidation prices came from Binance’s own spot order book, not from assets with hard pegs.

BUSD, however, stayed solid thanks to its fixed peg, and on-chain Aave oracle data for USDE still showed a clean 1:1 ratio, which meant the chaos came entirely from Binance’s internal pricing ￰6￱ collapse triggers mass liquidations When Bitcoin and altcoins started tumbling, the damage multiplied. Coin-margined traders were already bleeding, and the sudden depegging of collateral killed their remaining margin ￰7￱ crashed to $0.65, wBETH plunged to $0.20, and BnSOL hit $0.13. Even hedged positions didn’t stand a ￰8￱ margin balances evaporated, liquidations exploded across Binance ￰9￱ got wiped out, and market makers were forced to close everything, dumping their holdings just to ￰10￱ problem got worse because of Binance’s 12% yield program, which pushed large stablecoin holders to use Bn lending products for recursive USDE ￰11￱ setup amplified ￰12￱ the crash came, it dragged those leveraged loops down with it.

On-chain redemptions for USDE stayed fine, but prices on Binance plunged way below other exchanges, most stayed near $0.9, while Binance’s prices fell far ￰13￱ altcoins on Binance hit abnormal lows, a sign of large-scale forced ￰14￱ scale was ￰15￱ 24 hours, Binance recorded $3.5–4 billion in trading volume from USDE, wBETH, and ￰16￱ losses ranged between $500 million and $1 ￰17￱ that would mean Binance absorbing a billion-dollar ￰18￱ pointed to a clear failure in how margin collateral and liquidation pricing were structured, flaws that made the system easy to ￰19￱ exposes planning behind the attack What makes this look deliberate is ￰20￱ attack happened right between Binance’s oracle price update announcement on October 6 and the actual rollout on October ￰21￱ gave attackers eight full days to prepare.

Binance’s risk team had noticed some exposure, but the delay created an open window, and the exploit slipped right through ￰22￱ warned that for PoS-based assets, oracles should keep a hard floor price, even with liquidity ￰23￱ only on spot prices inside an exchange, especially one where both counterparty and operational risks are internal, is asking for ￰24￱ question of whether USDE is truly backed 1:1 is still ￰25￱ Luna-UST collapse proved how bad things can get when pegs ￰26￱ then, Binance lost money defending UST near $0.7. If the exchange insists on keeping USDE as margin collateral, limiting how much can be pledged would make more sense than pretending everything is ￰27￱ Lee, chairman of BitMine, told CNBC the market’s pullback was “overdue” after a 36% gain since ￰28￱ said the VIX jumped 29%, calling it one of the top 1% largest single-day volatility spikes in ￰29￱ called the sell-off “a healthy shakeout,” saying short-term returns could turn positive ￰30￱ @mindaoyang on X compared this crash to LUNA’s ￰31￱ said the danger comes from exchanges using non-fiat stablecoins as high-value collateral, letting risk spread ￰32￱ warned that mixing market-based pricing with high collateral ratios is the most dangerous setup, especially when centralized exchanges have poor arbitrage ￰33￱ added that LSD-type assets, those yield-bearing tokens disguised as “stable,” face the same problem: they look calm on the surface but move like volatile crypto ￰34￱ a premium crypto trading community free for 30 days - normally $100/mo.