Binance’s Crypto Crash: A Possible Coordinated Attack
A recent report by Wu Blockchain suggests that the October 11 crypto market crash might not have been random. It could have been a coordinated attack on Binance’s margin system.
Attackers may have targeted specific collateral assets on Binance,causing their values to plummet. This triggered mass liquidations across the exchange. The affected assets include USDE,wBETH,and BnSOL. During the crash, USDE fell to $0.65, wBETH to $0.20, and BnSOL to $0.13.
The timing of the attack is suspicious. It happened between Binance’s announcement of an oracle price adjustment on October 6 and its implementation on October 14. This window provided attackers with an opportunity.
The 24-hour spot trading volume for the three affected assets reached $3.5-4 billion on Binance. The estimated realized losses are between $500 million and $1 billion.
The vulnerability stemmed from Binance allowing PoS derivatives and yield-bearing stablecoins as unified margin collateral. Liquidation prices were derived from Binance’s own spot order book rather than hard-pegged values.
As Bitcoin and altcoins fell sharply, derivatives traders faced mounting losses. coin-margined positions saw declining coin prices combined with severe collateral depegging, further eroding margin values.
Market makers using these assets as margin were forced to close all positions and liquidate holdings, amplifying the downward pressure. USDE faced additional selling from Binance’s 12% yield program.
Investor Mindaoyang noted parallels between this crash and the LUNA collapse. Both incidents occurred when major exchanges accepted “non-fiat” stablecoins as high-collateral assets.
Wu Blockchain’s analysis suggested that liquidation oracles for PoS-based native assets should maintain hard floor prices rather than relying on spot order book pricing.
