Binance spends $283 million to compensate users after the terrible depeg. Photo: CoinGape
Binance announces $283 million compensation package
- When the global cryptocurrency market fell freely in the early morning of October 11 (Vietnam time), a series of Token on Binance such as wBETH, BNSOL and USDe plummeted, causing a wave of liquidation of more than 20 billion USD in just a few hours.
- Initially, many believed this was a “coordinated attack” or a serious system error from Ethena. But the latest facts show that the truth is more complicated: an internal oracle error on Binance caused the world's largest exchange to crash itself.
- By the evening of October 11, Binance confirmed that it had paid $283 million in compensation. for users affected by the depeg incident, Chia into two payments. The exchange also denied rumors that a cyber attack was the cause of the series of depegs that led to the market collapse.
- Binance emphasized: “The extreme market decline occurred before the depeg phenomenon began. Data shows that the sharpest price drop occurred from 21:20 to 21:21 (UTC) on October 10, while the severe depeg started after 21:36 (UTC).”
- In a separate post , Binance said it will change the way it prices affected assets, adding the redemption price of Token to the index weighting to avoid unusual fluctuations, and setting a soft floor for the USDe reference index.
88% fall causes chaos at night
- Back to that terrifying night, the price of wBETH (wrapped beacon ether) on Binance suddenly dropped to $430, representing an 88% discount compared to the ETH price of more than $3,800.
- BNSOL (BNB Staked SOL) also dropped to $34.90, while Ethena's synthetic stablecoin USDe fell to $0.65.
- According to Yi He, co-founder and Chief Customer Officer of Binance, the incident occurred amid a surge in users and severe liquidity liquidation . She apologized to users and stated that Binance will XEM each case individually to determine appropriate compensation, but only applies to losses caused by system errors, not including market fluctuations or unrealized profits.
Due to significant market fluctuations over the past 16 hours and a significant 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
- Contrary to initial assumptions, sources close to Ethena and Ethena itself confirmed that the problem did not originate from USDe or the project's delta-neutral mechanism, but from an internal oracle error at Binance. While other DeFi exchanges (like Curve or Uniswap) kept the USDe price stable, Binance's oracle - which draws data from its internal orderbook rather than external liquidation sources - was severely distorted when the market was congested.
On events of last Friday to be absolutely clear:
— G | Ethena (@gdog97_)October 12, 2025
i) Ethena's Mint and redeem function had zero downtime and was processing the largest number of withdrawals in its lifetime - more than $1b in a few hours and $2b in a 24hr period with zero issues.
ii) Primary liquidity venues…
- This caused Binance to create a significantly lower “artificial” price, triggering a series of liquidation orders and chain sell-offs.
- According to Brave New Coin, Binance announced the switch to using an external oracle on October 6, but the actual implementation date was October 14. The depeg incident happened on October 11, which is within the 4-day “vulnerable window” when the old pricing system was still active.
- Some analysts believe that the attacker may have used this time gap to push the price of wrapped Token down, profiting from Short positions or arbitrage. However, there is still no solid evidence for this hypothesis.
"Sequelae" of the incident
- At the same time, Binance recorded unusual price fluctuations in other Token such as IOTX and ATOM . ATOM even "plunged" to 0.001 USD before bouncing back to the 3.5 USD zone.
Someone bought $ ATOM on Binance at $0.001
— AlΞx Wacy 🌐 (@wacy_time1) October 10, 2025
And made +284.900% profit in minutes pic.twitter.com/WuTuYupb7h
- Binance explained that some old limit orders from 2019 were still in the system. When the market was in free fall and there was a lack of buyers, these orders were continuously filled, pushing the price down sharply in a short time.
- Furthermore, the IOTX/ USDT pair shows a price of 0 USD - which is actually a display error due to the limitation of the number of decimal places on the interface. Binance said it will fix this error in an upcoming update.
Major changes in infrastructure
- Within 24 hours of the incident, Binance implemented a series of emergency measures:
Switch to a conversion ratio pricing mechanism, instead of relying solely on spot prices that are prone to noise.
Add the redemption price of wrapped Token to the price index formula.
Set a soft price floor for assets like USDe to avoid temporary collapse.
Increase the frequency of reviewing risk management parameters to ensure the system responds promptly to market shocks.
- Binance confirmed that the exchange's core transactions remained operational throughout the incident and the error was primarily in the oracle/pricing module.
- After a historic drop, BNB - the coin of the Binance ecosystem - has increased by 17% in the past 24 hours. However, Binance said it is still processing additional compensation cases, pledging to review all data to ensure users are properly compensated.
Evidence
wBETH price movement against ETH during the depeg period, screenshot on CoinMarketCap at 09:30 AM on 10/13/2025
BNSOL price movement against SOL during the depeg period, screenshot on CoinMarketCap at 09:30 AM on 10/13/2025
USDe price movement during the depeg period, screenshot on CoinMarketCap at 09:30 AM on 10/13/2025
BNB price movement over the past 7 days, screenshot on CoinMarketCap at 09:30 AM on October 13, 2025
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