On October 13, 2025, Binance, the world’s largest cryptocurrency exchange by trading volume, revealed a comprehensive $283 million compensation program to reimburse users affected by a chaotic market event on October 10, 2025.
This initiative addresses losses from forced liquidations triggered by temporary depegging of key stablecoins and liquid staking tokens (LSTs), compounded by technical glitches during a broader crypto market crash.
The announcement comes amid a partial market rebound, with Bitcoin surging 3.74% to around $114,913 following a staggering $20 billion in total liquidations across the industry.
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The incident unfolded during a high-volatility selloff on October 10, between 21:36 and 22:16 UTC, exacerbated by external factors like U.S. President-elect Donald Trump’s announcements on tariffs against Chinese imports.
Over $7 billion in positions were liquidated in a single hour, with Binance alone accounting for $2.4 billion including $1.4 billion in longs and $981 million in shorts. This was part of a 24-hour wipeout affecting 1.6 million traders globally.
Stablecoin and LST Depegs: Three assets used as collateral in Binance’s Futures, Margin, and Loan products temporarily lost their pegs: USDe Ethena’s synthetic stablecoin dropped from $1 to as low as $0.66, despite maintaining stability on other platforms.
BNSOL (Binance’s Solana LST): Experienced sharp price swings. WBETH (Wrapped Beacon ETH LST): Also depegged amid the chaos. Surging volumes led to transaction errors, order delays, and redemption/transfer glitches, preventing some users from closing positions in time.
Binance noted that long-standing limit orders exacerbated spot price distortions during the liquidity crunch. These events particularly hit users in Binance Earn products, where the depegged assets served as collateral, forcing unintended liquidations.
Binance’s native token, BNB, dipped nearly 10% in the aftermath but has since recovered, reclaiming its spot as the third-largest non-stablecoin crypto by market cap. Binance’s two-phase program is designed to make affected users whole, focusing on verifiable losses.
Phase 1 (Liquidation Compensation): Covers Futures, Margin, and Loan users who held USDe, BNSOL, or WBETH as collateral during the depeg window. Payouts equal the gap between the liquidation price and the asset’s market price two hours later at 00:00 UTC on October 11.
Phase 2 (Operational Delays): Addresses delays in internal transfers or redemptions caused by system overloads. Automatic for verified impacted accounts; users who bought depegged assets at discounts retain gains. Wealth management clients follow a separate process.
Binance CEO Richard Teng and co-founder Yi He issued public apologies, emphasizing accountability: “We don’t make excuses and will learn from what happened.” Notably, Ethena Labs’ CEO Guy Young disputed the severity of the USDe depeg, calling it a Binance-specific anomaly rather than a protocol-wide issue.
Binance outlined enhancements: Adding redemption prices to index weights for affected assets. Implementing a “soft price floor” in USDe’s reference index.
While decentralized protocols like Uniswap and Aave handled the volatility without major hitches—processing record volumes and liquidations seamlessly—the event highlights ongoing risks in centralized exchanges during extreme conditions.
Community calls for regulatory scrutiny on liquidation fairness have emerged, with OKX CEO Hong Fang criticizing the scale of user harm. This compensation underscores Binance’s commitment to user protection amid crypto’s inherent volatility, though it serves as a reminder that trading remains high-risk.