A post triggered the "largest disaster in cryptocurrency history": Binance outage, the "third largest stablecoin" depegged and the tragic "iron chain linking boats"

This Friday, a post by U.S. President Trump on social media regarding tariff threats acted like a heavy bomb, triggering a brutal "bloodbath" in the cryptocurrency market.

Bitcoin's price significantly fell from its historical high of over $126,000 on Friday, once dropping below the $110,000 mark, with a decline of 13.5% on that day. Ethereum plummeted over 17% at one point, while Ripple and Dogecoin saw even steeper declines of over 30%.

The total market capitalization of the cryptocurrency market evaporated by nearly $800 billion within hours. Statistics show that the total amount of leveraged positions liquidated across the network exceeded $20 billion, described by industry insiders as “the largest liquidation event in cryptocurrency history.”

However, when the market needed liquidity the most, some centralized exchanges (CEX) failed. During the peak of the liquidation, exchanges like Binance experienced system delays and trading interruptions, with many users reporting an inability to execute orders or manage positions, leading to expanded losses.

Social media was filled with anger towards Binance, accusing it of "pulling the plug" at a critical moment. This incident not only exposed the technical bottlenecks of centralized exchanges under extreme market conditions but also reignited the debate about the risk resilience of centralized versus decentralized finance (DeFi).

Meanwhile, some opinions pointed out that this crash was not merely a market behavior but a "targeted attack" triggered by specific assets decoupling, exploiting vulnerabilities in the Binance system.

A "Chain Reaction" Liquidation

According to a widely circulated post on Binance Square, this crash was not without warning but had been slowly brewing in a highly leveraged market environment.

The post pointed out that firstly, the market had long been a "ticking time bomb," characterized by: traders generally using high leverage to go long, open contract volumes at dangerously high levels, and a large number of low-quality tokens being listed, leading to diluted liquidity.

Trump's tariff threat became the "external spark" that ignited it all. Traditional markets reacted first, followed by Bitcoin and Ethereum, while the already fragile altcoins collapsed instantly.

Secondly, there was the "trigger" of the chain reaction. The cryptocurrency market operates on leverage, and when prices fall below key support levels, the automatic liquidation mechanisms of exchanges begin to activate. This was not an emotional sell-off but a program automatically executed by exchanges to protect their loans

The post describes the specific details of the liquidation chain reaction:

• First and foremost, accounts using cross-margin were forcibly liquidated due to the price drop of certain assets, and their collateral was forcibly sold by the system;
• Subsequently, the forced sale of collateral further depressed prices, creating a waterfall effect of "one liquidation triggering another liquidation."

Data shows that over $550 million in futures positions disappeared in just a few minutes, ultimately leading to a liquidation disaster totaling over $20 billion.

Downtime Crisis: Centralized Exchanges Face Trust Issues

When the market needed liquidity and stability the most, the performance of some centralized cryptocurrency exchanges (CEX) was unsatisfactory.

According to Cryptopolitan, several centralized exchanges experienced severe system congestion during the liquidation period, leading to application freezes, order book lags, and some users were even locked out of their accounts during market volatility, unable to perform any operations.

In addition to Binance, platforms like Coinbase and Robinhood also reported similar issues.

In stark contrast, decentralized finance (DeFi) platforms passed this stress test smoothly. Reports indicate that decentralized exchanges (DEX) like Uniswap and Aave did not experience any technical issues or service interruptions during market turmoil.

Among them, the Aave platform perfectly handled $180 million in liquidations without human intervention; while Uniswap processed nearly $9 billion in trading volume. This performance disparity has once again tested the industry's trust in centralized platforms.

"Targeted Attack" or System Flaw? The Third Largest Stablecoin Severely Depegged

As more details emerge, a theory regarding this crash being a "targeted attack" on Binance has begun to gain attention.

Forgiven, an executive from the Conflux network, stated on social media that this incident could be a coordinated attack on Binance's Unified Margin system. This system allows traders to mix various assets as collateral.

However, this flexibility turned into a risk transmission channel during severe market fluctuations. As the collateral assets USDe, BNSOL, and WBETH depegged, the value of the collateral collapsed, triggering large-scale forced liquidations.

Forgiven pointed out that attackers may have exploited this by concentrating on suppressing the prices of specific assets like USDe, BNSOL, and WBETH on Binance, causing severe depegging. Data shows that the price of the world's third-largest stablecoin—USDe—on Binance once dropped to $0.65, while the price on other platforms remained at $0.90 during the same period Forgiven believes that the extreme declines of several alternative tokens appearing only on Binance are signs that the hedge investment portfolios of major market makers have been breached.

Binance Becomes the Target of Criticism

Regardless of the underlying reasons, as the world's largest exchange, Binance has become the focal point of user criticism during this turmoil.

Many users claim to have encountered issues such as account freezes and invalid stop-loss orders during the market crash. More seriously, tokens like Enjin (ENJ) and Cosmos (ATOM) experienced "flash crashes" on Binance, with prices plummeting to zero before quickly rebounding. This has led to user accusations of market manipulation, suggesting that the platform profited amid the chaos.

In response, Binance acknowledged that "intense market activity" caused system delays and display issues, assuring users that "funds are safe (SAFU)." Currently, Binance states that its system has been restored.

However, this has not quelled the community's anger. Critics are calling for regulatory agencies to intervene and investigate, and this is not the first time Binance has faced accusations over similar incidents.

Image: Social media is flooded with numerous complaints from users dissatisfied with Binance.

Ultimately, although this leveraged-driven crash was brutal, it also cleared the excessive risks accumulated in the market. As has happened multiple times in history, the deleveraging process is part of the market cycle and will continue in the future.

But this time, the risk control issues of centralized exchanges and decentralized exchanges will remain in the spotlight