The crypto market woke up to chaos early this morning. Multiple altcoins on Binance suffered flash crashes exceeding 90%, with IOTX briefly falling to $0, according to market data. The abrupt declines triggered shockwaves across the industry as traders scrambled to understand what happened. Cross-Margin Liquidations May Have Triggered the Crash BitMEX co-founder Arthur Hayes commented on the event, suggesting that major centralized exchanges (CEXs) may have automatically liquidated collateral tied to cross-margin positions, creating a massive selloff chain reaction. “Rumor has it that major CEXs liquidated cross-margin collateral automatically,” Hayes said. “Prices of many high-quality altcoins are unlikely to revisit those lows anytime soon.” Word on the street is that big CEX’s auto liquidation of collateral tied to cross margined positions is why lots of alts got smoked on the move down. Congrats to all you stink bidders. We won’t be seeing those levels any time soon on many high quality alts. — Arthur Hayes (@CryptoHayes) October 11, 2025 The speculation aligns with data showing an unusually high volume of automated liquidations in a short time window, suggesting that the crash may have been triggered by systemic margin clearing events, not just panic selling. Binance Insurance Fund Deployed $188 Million Binance Futures data revealed the extent of the impact on the exchange’s internal risk systems. During the volatility, the shared insurance fund balance for BTC, ETH, and BNB USDT-margined contracts fell from $1.23 billion to $1.04 billion. That means $188 million was deployed to cover losses and stabilize trading operations as prices crashed. The fund serves as a safety net during liquidation events, automatically absorbing losses from traders whose accounts fall below maintenance margin levels. This is one of Binance’s largest single-day fund deployments since the FTX collapse in 2022, a signal of how severe the volatility was. Binance Moves to Compensate Affected Users In response, Binance co-founder He Yi confirmed that the exchange is preparing a compensation plan, potentially the largest in its history. She acknowledged that some users experienced issues executing transactions amid the surge in traffic and promised that each case would be reviewed individually. “Due to significant market fluctuations over the past 16 hours and a substantial influx of users, some users have encountered issues with their transactions,” He Yi said. “If you have incurred losses attributable to Binance, please contact customer service to register your case. We will review your account activity individually and provide compensation accordingly.” Due to significant market fluctuations over the past 16 hours and a substantial influx of users, some users have encountered issues with their transactions. I deeply apologize for this. If you have incurred losses attributable to Binance, please contact our customer service to… https://t.co/9Q7GZuFY5H — Yi He (@heyibinance) October 11, 2025 However, she clarified that losses caused by market movements or unrealized profits would not qualify for compensation. “When We Fall Short, We Take Responsibility”, He Yi In her follow-up post, He Yi reiterated Binance’s commitment to accountability, emphasizing that the exchange would not avoid responsibility where due. “The reason Binance is Binance is that we never shy away from problems,” she wrote. “When we fall short, we take responsibility, there are no excuses or justifications.” She also urged users to remain cautious, reminding traders that the market remains volatile and that investment risks are heightened during such periods. Solana Passes Its Biggest Stress Test Yet The crash didn’t only test traders, it tested the infrastructure of blockchain networks. According to SolanaFloor, the Solana core development team Anza confirmed that the network endured its largest stress test ever during the liquidation event. “The Solana network reached a peak throughput of 100,000 TPS and remained fully stable,” Anza stated. “The Agave validator client handled 6× peak traffic and processed 60 million compute units (CU) per block without performance degradation.” BREAKING: @anza_xyz says @solana went through its biggest stress test yet during last night's massive liquidation event, reaching a record 100K TPS while staying fully stable. The Agave validator client handled 6x peak traffic and full 60M CU blocks without network degradation. pic.twitter.com/SgPOI609wg — SolanaFloor (@SolanaFloor) October 11, 2025 This resilience reinforced confidence in Solana’s infrastructure at a time when network stability is under scrutiny across the ecosystem. Exchanges Pass or Fail Their Own Stress Tests The sudden crash acted as a real-world stress test for multiple exchanges and trading systems. OKX CEO Star stated that their global risk control system remained “stable and responsive,” reporting no downtime and normal system indicators despite the volatility. Operations ran smoothly across all regions. Meanwhile, Hyperliquid, the emerging onchain trading platform, reported zero disruptions even as it hit record trading volume and traffic. “Hyperliquid experienced zero downtime or latency during the market turbulence,” the team announced. > “HyperBFT consensus and execution handled the spike in throughput gracefully.” During the recent market volatility, the Hyperliquid blockchain had zero downtime or latency issues despite record traffic and volumes. HyperBFT consensus and execution handled the spike in throughput gracefully. This was an important stress test proving that Hyperliquid's… — Hyperliquid (@HyperliquidX) October 11, 2025 For Hyperliquid, the event became a live demonstration of its fully onchain risk and margining model, which functioned as designed, maintaining solvency and platform stability throughout the chaos. A Night That Tested Every System Across the board, the crash became a stress event for the entire crypto ecosystem, from exchanges to blockchains to risk systems. While traders faced heavy losses and panic swept through Telegram groups and X threads, the incident revealed a clearer picture of which platforms are battle-tested. Binance’s insurance fund did its job, Solana proved resilient under record throughput, and Hyperliquid validated its onchain model. At the same time, it exposed the fragility of cross-margin mechanisms and the risks of automated liquidations that can cascade through CEX ecosystems. The Market Still on Edge As markets attempt to stabilize, liquidity remains thin, and volatility persists. Binance’s review and compensation plan may take time, but the message from leadership is clear: they intend to address user losses fairly. The broader takeaway is one the market has seen before, rapid liquidations can still bring even the largest exchanges to the brink. But this time, some systems held firm. For now, caution rules the market. The lesson remains the same: never underestimate how fast crypto can move. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news !
