Simply put
- Binance stated that reports of tokens dropping to zero were related to a display error, and that its system was fully operational during the significant $19 billion market-wide liquidation.
- The tokens affected and depegged on exchanges included USDe, BNSOL, and wBETH.
- Analysts noted that the dividend payout was unusual and likely intended to help restore confidence following recent leadership changes.
On a Sunday afternoon, Binance reported that it had refunded users affected by the depegging of various Earn assets on October 10th. It later clarified that the drastic price falls observed during the market crash on Friday were due to a display issue rather than a failure of the tokens themselves.
Hours later, Binance affirmed that its core trading system was functioning normally and attributed the volatility to “general market conditions” instead of issues with its platform.
According to the statement, “The volume of forced liquidations processed was a relatively small percentage of the total trading volume.”
Binance also mentioned completing compensation of around $283 million within 24 hours, targeting users who faced liquidations while using the affected assets as collateral for margin, futures, and loan products.
Furthermore, Binance indicated plans to continue investigating user cases and to report any suspicious trading activities to regulators.
A spokesperson for Binance noted that the company aimed to gather updated information internally and indicated that a comprehensive response might take longer due to time constraints.
Crypto’s “Black Friday”
The recent “Black Friday” crash occurred between 8:50 PM and 10:00 PM (UTC) on October 10th, leading to a notable downturn in the entire cryptocurrency market.
Assets that depegged on Binance included USDe, a synthetic dollar by Ethena, BNSOL, which are Binance-listed liquid staking derivatives, and wBETH, a wrapped version of Binance’s staking ether.
Analysts indicated that the approximately $250 million payout was notable for both its size and timing, suggesting it was driven by reputational concerns alongside acts of goodwill.
Ryan Yun, a senior analyst at Tiger Research, commented on the unusual circumstances, noting that Binance has faced multiple issues recently and that the Black Friday incident was just one example. He remarked that the depegging of wrapped tokens could represent “platform-specific liquidity fragmentation,” suggesting that the payouts might relate more to managing reputational risk in the current post-CZ landscape rather than simply goodwill.
Ming Zhong, a senior analyst at Presto, mentioned that while the $283 million compensation may appear substantial, it is relatively minor compared to Binance’s overall revenue.
Zhong concluded that this action likely represented both goodwill and strategic considerations, aiming to bolster user trust and enhance the brand image as competition between centralized exchanges and decentralized ones intensifies.
