On October 10, 2025, the crypto market experienced an unprecedented "Black Friday" crash. News that the US would impose a 100% tariff on Chinese goods sent shockwaves through the market. In just a few hours, $1.9 billion in leveraged positions were forcibly liquidated, setting a new all-time high for single-day liquidations in crypto history—far exceeding the 2022 Terra/Luna collapse and the FTX crisis.
During this extreme volatility, multiple assets on Binance—including USDe, BNSOL, and wBETH—lost their pegs, triggering a chain reaction.
01 Event Recap: The Crypto Flash Crash of Black Friday
From October 10 to 11, 2025, the crypto market was rocked by a dramatic flash crash. Dubbed the "2025 Leverage Reset," this plunge wiped out nearly $45 billion in market capitalization within a short span.
The trigger was clear: After US President Trump announced new tariffs on China, global risk aversion surged. The Bitcoin price plummeted from around $121,300 to $105,000—an 11% drop.
The scale of the collapse was staggering. By noon on October 11 (UTC), total liquidations over 24 hours reached $1.91 billion, a new record. Of the 1.23 million positions forcibly closed, 88% were long positions.
02 Binance in the Crosshairs: Depegging Incidents and Platform Response
Amid the turmoil, Binance faced unprecedented pressure. The synthetic dollar stablecoin USDe suffered a severe depeg, dropping to $0.65—35% below its $1 target.
At the same time, two other assets—BNSOL (a Solana liquid staking token) and wBETH (Binance’s wrapped staked Ethereum)—also crashed. The simultaneous declines created a feedback loop, intensifying market panic.
Binance’s response drew significant attention. The company quickly launched an investigation and pledged compensation for affected users. According to disclosures, Binance ultimately paid out about $283 million in compensation, covering users whose collateral in margin, futures, and loan products was liquidated due to holding the impacted assets.
03 Deep Dive: Multiple Factors Behind the Crash
This market meltdown wasn’t caused by a single factor, but rather a confluence of forces. The sudden shift in global macro policy was the spark, but internal market fragilities also played a critical role.
Excessive leverage has become the crypto market’s Achilles’ heel. By October 2025, open interest in crypto derivatives had surpassed previous highs, with many investors chasing returns through high leverage. When volatility struck, these positions were rapidly liquidated, triggering a cascade of forced selling.
USDe’s structural risks became glaringly apparent during the turmoil. Unlike traditional fiat-backed stablecoins, USDe uses a delta-neutral strategy that relies on derivatives markets for hedging. When liquidity dries up and prices swing wildly, this mechanism can break down, leading to depegging.
04 Impact Assessment: Market Ecosystem and Regulatory Response
The crash left a deep mark on the crypto ecosystem, reshaping investor behavior and shifting regulators’ focus.
A key change was heightened risk awareness among investors. After this episode, more traders began to reassess their use of high leverage, especially during weekends and major policy events. This rational shift is crucial for the market’s long-term health.
Regulatory scrutiny also intensified. In the aftermath, global regulators demanded stronger risk management and user protection from crypto exchanges. Platforms were forced to enhance internal controls and transparency to restore market confidence.
05 Binance’s Response: $283 Million Compensation Strategy
In response to the crash, Binance rolled out a series of crisis measures, most notably a large-scale user compensation plan totaling $283 million.
The compensation targeted users who suffered losses from asset depegging, especially those using USDe, BNSOL, or wBETH as collateral in margin, futures, or loan products. Binance pledged to complete the main compensation process within 24 hours.
Analysts noted that this move demonstrated Binance’s commitment to user protection and was a key step in managing reputational risk. A senior quant analyst commented that although the payout "seems large, it’s still relatively small compared to Binance’s overall revenue," adding that the main goal was to preserve brand reputation and user trust.
06 The Role of Changpeng Zhao: The Founder Amid the Storm
As Binance grappled with the crisis, its founder Changpeng Zhao faced a pivotal moment in his personal legal saga. Just before the crash, on October 23, 2025, he received a pardon from US President Trump.
However, the pardon itself was controversial. Zhao had been convicted of money laundering charges in 2023 and sentenced to four months in prison. After his release in September 2024, his $2 billion investment deal with Abu Dhabi state-owned enterprise MGX sparked speculation about his ties to the Trump family.
At the World Economic Forum in Davos in January 2026, Zhao clarified that he had no business relationship with the Trump family and had never even spoken with Trump. He explained that MGX’s investment, using the USD1 stablecoin issued by World Free Finance, was merely a payment method and did not imply endorsement of the issuer.
07 Industry Lessons: Crypto Market Fragility and Resilience
While the October 2025 crash caused massive losses, it also delivered valuable lessons for the entire crypto industry. These lessons are driving exchanges, projects, and investors toward greater maturity and stability.
A renewed focus on risk management has become industry consensus. In the aftermath, major exchanges strengthened their risk controls and improved their ability to handle extreme market scenarios. Investor education also reached new heights, particularly regarding leverage and asset diversification.
Balancing technological innovation with regulatory compliance is now more critical than ever. Binance’s compensation measures highlighted the responsibility of centralized exchanges in crisis management, while the USDe depeg underscored the need for robust design in new financial products—especially under extreme market conditions.
08 User Guide: Rational Strategies for Market Volatility
For individual investors, protecting themselves in a highly volatile crypto market became a top concern after the crash. Based on lessons from October 2025, here are some practical tips:
Managing leverage prudently is the most basic and important principle. Historical data shows that excessive leverage is the main cause of liquidations, especially during sharp market swings. Investors should carefully assess their risk tolerance when deciding on leverage levels.
Prioritize liquidity and stability when selecting assets. During crashes, illiquid assets tend to be more volatile and recover more slowly. For synthetic stablecoins like USDe, it’s essential to fully understand their mechanisms and risks to avoid being caught off guard in extreme conditions.
As of January 29, 2026, the crypto market has gradually recovered from the crash, but the lessons of that "Black Friday" remain vivid. The wounds have mostly healed, but everyone who weathered the storm knows that respecting risk is no longer just a cliché—it’s a survival rule paid for in real money.
The historic $1.9 billion single-day liquidation, exchanges’ emergency response mechanisms, and the delicate balancing act of founders’ business and legal affairs together mark a profound chapter in the evolution of the crypto world.
