October 10th was no ordinary day in the crypto industry. That’s right, Donald Trump “retaliated” after China announced new plans to curb exports of rare earth metals. Truth Social, X, that’s typical Trump. The president will not be afraid to show how powerful America is.
The truth of the matter is that the new news on China tariffs was not expected to force a huge drop on that thin Friday night. A -10% drop in Bitcoin would be extreme. But on October 10th, things quickly went from bad to worse, with the world’s most valuable coin plummeting from more than $120,000 to less than $105,000 in 15 minutes after what appeared to be a relatively “minor” trigger.
According to Coinglass, more than $16 billion of leveraged positions, including long and short, were liquidated on October 10th. The sheer scale of this liquidation makes October 10th the largest single-day liquidation event in history. It is truly a black swan event for cryptocurrencies.
(sauce: coin glass)
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what happened? Why did cryptocurrencies fail? Manipulation or system failure?
On the surface, it’s easy to blame Trump.
But digging deeper, President Trump had nothing to do with the “other” recession, other than a mild correction that would normally cause BTC USD and some currencies to fall. Best cryptocurrencies to buy Drop -10% max
24 hours 7 days 30 days 1 year Always
There are various theories. Some blame Binance, the world’s largest cryptocurrency exchange, while others think this is nothing more than insider trading.
Those who attribute the decline to insider activity point to the massive shorting of Bitcoin and Ethereum in Hyperliquid within the hour before the decline.
As reported by 99Bitcoins, the trader, who is said to have ties to the Trump family, denied any involvement and said the funds belonged to his customers.
However, some people directly criticize Binance. In their view, the exchange reportedly withdrew liquidity and (unintentionally) amplified volatility on a typical Friday night as traders prepare for the weekend, further exacerbating the decline.
Regardless of whether it was a systemic failure or not, traders and market makers, including Wintermute, were devastated.
> Binance’s internal oracle causes $400 billion liquidation in flash crash
> Binance offers $40 million in “Recovery Airdrop”> Founders claim Binance charges more than $5 million in predatory token listing fees
> Binance hints at legal actionNotice a pattern here?
Get your funds out of Binance.— curb.sol (@CryptoCurb) October 14, 2025
An anonymous whale on Binance lost over $450 million when his long BTC USDT position was closed. Wintermute lost more than $300 million. Another Chinese hedge fund lost more than $180 million. The list goes on.
Market Maker Friends Speak: What Exactly Happened on Binance on the Night of 10/11 | Let the Data and Facts Do the Talk
I was doing spot futures arbitrage. I also have quite a few friends who are market makers. Many of them knew, directly or indirectly, that I had suffered a great loss. Ironically… pic.twitter.com/gUbH4LFaO9—812.eth
(@GammaPure) October 20, 2025
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Lawsuit happens: Wintermute CEO
To appease traders and hedge funds, Binance distributed the goodies of airdropping BNB to meme coin traders on Binance Smart Chain.
But this is not enough. Experts are now predicting a new wave of class action lawsuits targeting market manipulators, exchanges and even liquidity providers.
Arthur Cheong, chief information officer at DeFiance Capital, has already asked victims of X to message him if they wish to sue CEX who they believe should have done something to limit their losses.
PSA to friends:
If you suffered significant losses on CEX during the October 10th flash crash and would like advice on pursuing this further, please feel free to DM me.
We have experience in high-stakes commercial litigation and can give you an informed opinion on it.
— Arthur (@Arthur_0x) October 19, 2025
Binance is likely to be the subject of a lawsuit.
Wintermute CEO Evgeny Gayvoy said in a recent podcast that the company is already considering its legal options and intends to sue Binance over a malfunctioning automatic deleveraging (ADL) system. Mr Gayboy said their ADLs were performed at completely exorbitant prices.
Wintermute CEO @EvgenyGaevoy talks about how he acquired ADL on Binance and predicts lawsuits and challenges from trading companies. pic.twitter.com/d2hGXoOOHc
— cryptotesters (@cryptotesters) October 20, 2025
Centralized exchanges typically place ADL positions during periods of extreme volatility to manage risk. Gayboy said this was a “last resort” but Wintermute had to absorb positions at ridiculously unreasonable prices that did not reflect market reality.
He noted a notification that the short position was closed at five times the actual market price, incurring an immediate non-hedgable loss.
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Wintermute CEO: Wave of lawsuits over October 10th cryptocurrency flash crash
Cryptocurrency crash on October 10th wiped out over $16 billion in leveraged positions
Donald Trump triggered stock market decline
Big whale lost hundreds of millions of dollars
Wintermute CEO says exchanges should expect a wave of lawsuits
The post Expect a wave of lawsuits after October 10’s crypto flash crash: Wintermute CEO appeared first on 99Bitcoins.
