Binance Unveils Rapid Response: $19B Crypto Liquidation Event Compensation Plan in 72 Hours

Key Points

• Binance announces compensation for users affected by the recent crypto liquidation event.
• The exchange also plans to strengthen risk management controls to prevent similar future occurrences.

On October 11, Binance made public its plans to compensate users who were negatively impacted by recent industry events.

The 10th of October saw the largest crypto liquidation event in history, exacerbated by the price depegging of USDE, BNSOL, and WBETH. This led to forced liquidations affecting some Binance users’ asset positions.

Details of the Liquidation Event

The general crypto market was over $3.74 trillion on October 11, down by more than 9% in the last 24 hours, following the industry’s biggest liquidation. The 24-hour crypto liquidations amounted to almost $19.3 billion, with more than $16.78 billion in crypto longs being liquidated and $2.5 billion in shorts, as per CoinGlass data.

In the past 24 hours, over 1.65 million traders were liquidated, with the largest single liquidation order occurring on Hyperliquid. More than $10.25 billion was liquidated on the DEX, with over $9 billion in long positions and over $968 million in shorts.

Binance recorded over $2.39 billion in crypto liquidations, with over $1.41 billion in longs and over $982 million in short positions in the past 24 hours.

The 10th of October was the largest crypto liquidation day ever, surpassing even the covid and other events. Over $16 billion in long positions were liquidated that day, and more than $2.4 billion in shorts. Binance saw the biggest crypto liquidations, according to CoinGlass data.

Price Depeg of USDe, BNSOL, WBETH

Binance disclosed on October 11 that the recent price depeg of three tokens, USDe, BNSOL, and WBETH, resulted in forced liquidations affecting some users’ asset positions. These tokens were used in margin/futures/derivatives markets as collateral, synthetic positions, and hedges, and their sudden value drop triggered liquidations.

Binance’s Compensation Strategy

In its official announcement, Binance stated that it conducted a review of the impacted users, details surrounding liquidations, and appropriate compensation measures. The exchange also worked to enhance its risk management controls to mitigate potential similar events in the future.

Binance assured users that there is no need to contact or register with the customer service team, and requested users to remain patient as the exchange was working to resolve all issues.

A few minutes later, the exchange announced that following its review, it would compensate all impacted Futures, Margin, and Loan users within 72 hours. The compensation will be automatically distributed to users’ accounts directly.

Binance’s Prevention Plan

In the same announcement, Binance disclosed that to prevent a recurrence, it would implement additional safeguards and adjust relevant parameters. The redemption price will be added to the BNSOL, WBETH, and USDe price index weights. The USDe index rule will include a minimum price threshold to boost price stability. The frequency of risk control parameter reviews will be increased to ensure dynamic adjustments according to market conditions.

Despite the huge crypto liquidation event on October 10, optimism is expected to return to the crypto market. The unfortunate event occurred after Bitcoin (BTC) reached a new ATH above $126,000 on October 6, sending the digital asset to $104,000 levels on October 11.

At the time of writing, Bitcoin has rebounded and is currently trading above $112,000. It’s worth noting that Bitcoin had the same price two weeks ago as well.

While some are maintaining FUD and claiming that the industry is not reliable, it’s essential to see the bigger picture and note that Bitcoin is only 11% down from its ATH despite the industry being hit by the biggest liquidation event in its history.

This event occurred amidst significant geopolitical tensions, but Bitcoin (BTC) is expected to rebound after flushing out the weak hands during the past days. The digital asset’s recovery from $104,000 today shows the first bullish signs.

Also, a new rate cut is expected from the US Fed this month, another bullish trigger for the market. Institutional interest in BTC continues, and global adoption is on the rise as well.

Justin Sun, Tron’s founder, stated earlier that unity is the most important thing in the crypto space, despite all volatility, and more or less artificially orchestrated tragic events. The market is expected to resume its uptrend after this “calculated reset,” as some voices in the industry have called this latest event.