How a $90 Million Dump Triggered a $19 Billion Bloodbath
October 11 will go down as one of the most chaotic days in crypto history. In just hours, Bitcoin, Ethereum, and a slew of altcoins plummeted, wiping out over $19 billion in liquidations. Traders faced devastating losses, exchanges buckled, and social media erupted with blame.
The scapegoat? USDe, a stablecoin gaining traction. Headlines screamed “depeg.” Traders swore it was another Terra-style collapse.
But the truth is far more intriguing - and far more calculated.
What unfolded wasn’t a stablecoin implosion. It was a meticulously planned attack on Binance’s collateral system, executed with surgical precision and cloaked by a convenient macroeconomic shock.
Setting the Stage: A Flaw in the System
Every major heist starts with a vulnerability. In this case, it was hidden in plain sight on Binance.
The exchange’s Unified Account system allowed users to post diverse assets - from core tokens to staked derivatives like wBETH and BNSOL - as collateral for leveraged trading.
Here’s the catch:
- Instead of relying on external oracles or redemption prices, Binance valued collateral based on its own internal spot market prices.
- This meant that manipulating those order books could instantly tank collateral values and trigger mass liquidations.
Binance knew about this weakness. On October 6, it even announced plans to shift to oracle-based pricing. But the change wasn’t set to take effect until October 14.
That left an 8-day window. And someone was watching.
The Strike: A $90 Million Dump with Outsized Impact
On October 11, the trap sprang. Roughly $60–90 million in USDe, wBETH, and BNSOL was dumped onto Binance’s spot order books.
The fallout was immediate:
- USDe, trading near $1 everywhere else, crashed to $0.65 - but only on Binance.
- Since collateral was valued at Binance’s prices, this deviation obliterated margin balances across countless traders.
- Within minutes, forced liquidations worth $500 million to $1 billion rippled across the platform.
Then, as if on cue, the macroeconomic world chimed in. News broke of Trump announcing 100% tariffs on China. Global markets dipped, and the crypto cascade accelerated.
It looked like chaos. In reality, it was choreography.
The Real Money: Short Positions on Hyperliquid
The genius of this scheme wasn’t the USDe dump. That was just the lever. The real money was made elsewhere.
Hours before the Binance crash, a cluster of new wallets appeared on Hyperliquid, a decentralized perpetuals exchange. Funded with $110 million in USDC from sources tied to Arbitrum, they opened staggering short positions on BTC and ETH worth $1.1 billion.
As the Binance-triggered liquidation cascade sent BTC and ETH into freefall, these shorts printed money - $192 million in profits, closed out right at the bottom.
The timing was impeccable. The funding sources were carefully layered. This wasn’t luck - it was a coordinated play.
The Domino Effect: From Local Depeg to Global Collapse
Once Binance’s liquidation machine kicked in, the process became unstoppable:
- Liquidated BTC, ETH, and altcoin positions hit a thin market, exacerbating slippage.
- Arbitrage bots spread the collapse across exchanges.
- Market makers, hedged across platforms, were forced to unwind operations everywhere.
The $90 million dump was a spark in a tinderbox. By targeting Binance’s collateral flaw, the attackers weaponized the exchange’s own system against its users. The macroeconomic news was the perfect cover, amplifying the panic and masking the manipulation.
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The Aftermath: Questions and Lessons
The October 11 crash wasn’t a random market event. It was a calculated exploit that exposed critical vulnerabilities in one of the world’s largest exchanges. While Binance has since accelerated its move to oracle-based pricing, the damage was done - $19 billion in liquidations, countless traders wiped out, and trust in the system shaken.
Who was behind it? The wallets on Hyperliquid trace back to Arbitrum, but the trail grows murky. On-chain analysts are digging, but the perpetrators likely covered their tracks well.
What’s clear is this: the crypto market remains a battleground where sophistication meets opportunism.
For every trader chasing profits, there’s someone else gaming the system. October 11 was a stark reminder - always check the fine print, because the house doesn’t always win, but the sharpest players usually do.
