A post triggered the "biggest tragedy in the currency circle's history": Binance crashed, the "third largest stable coin" slipped anchor, and a fierce "chain of iron and boats".

This past Friday, a post by US President Trump on social media regarding tariff threats, was like a heavy bomb that triggered a fierce "bloodbath" in the cryptocurrency market. Bitcoin prices dropped significantly on Friday from a peak of over $126,000, briefly falling below the $110,000 mark, with a drop of 13.5% that day. Ethereum dropped over 17%, while Ripple and Dogecoin plummeted over 30%. The total market value of the cryptocurrency market evaporated nearly $800 billion within hours. According to statistics, the total amount of liquidation in leveraged positions exceeded $20 billion, described as the "largest liquidation event in cryptocurrency history." When the market needed liquidity the most, some centralized exchanges (CEX) failed. During the peak of liquidation, exchanges like Binance experienced system delays and trading interruptions, with many users reporting an inability to execute orders or manage positions, leading to increased losses. Social media was filled with anger towards Binance, accusing the platform of "pulling the plug" at a critical moment. This event not only exposed the technical bottlenecks of centralized exchanges in extreme market conditions, but also reignited the debate on the risk resilience capabilities of centralized and decentralized finance (DeFi). At the same time, some views pointed out that this crash was not just a simple market behavior, but a "targeted attack" triggered by exploiting vulnerabilities in the Binance system and specific asset disanchoring. A "chain reaction" liquidation According to an analysis widely circulated in the Binance community, this collapse was not sudden, but rather slowly brewing in a highly leveraged market environment. The analysis pointed out that the market was already a "ticking time bomb," characterized by traders using high leverage for long positions, dangerously high levels of open contracts, and a dilution of liquidity due to the listing of many low-quality tokens. Trump's tariff threat acted as the "external spark" that ignited everything. Traditional markets reacted first, followed by Bitcoin and Ethereum, while the already vulnerable altcoins collapsed instantly. Following this was a chain reaction of "triggers". The cryptocurrency market operates on leverage, and when prices fell below key support levels, exchanges' automatic liquidation mechanisms kicked in. This was not emotional selling, but automated procedures by exchanges to protect their loan positions. The post described the details of the chain reaction of liquidation: accounts using cross margin were forcibly liquidated due to the drop in the price of some assets, their collateral was forcibly sold by the system; this forced selling of collateral further suppressed prices, creating a "domino effect of one liquidation triggering another". Data showed that over $550 million in futures positions disappeared in just a few minutes, ultimately leading to a total of over $20 billion in liquidation. Outage crisis: Centralized exchanges face trust crisis 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, resulting in frozen applications, order book freezes, and some users being locked out of their accounts during periods of intense market volatility. Apart from Binance, platforms like Coinbase and Robinhood also reported similar issues. In stark contrast, decentralized finance (DeFi) platforms smoothly passed this stress test. Uniswap and Aave, decentralized exchanges (DEX), did not experience any technical issues or service interruptions during market turmoil. Among them, the Aave platform successfully handled $180 million in liquidation without human intervention; while Uniswap processed nearly $9 billion in trading volume. This performance difference has once again put the industry's trust in centralized platforms to the test. "Targeted attack" or system flaw? Global third-largest stablecoin severely disanchored As more details emerged, a theory about this collapse being a "targeted attack" against Binance began to gain attention. Forgiven, a senior executive at Conflux Network, posted on social platforms, suggesting that this event may have been a coordinated attack on Binance's Unified Margin system. This system allows traders to use multiple assets as collateral. However, this flexibility turned into a risk transmission channel during market volatility. As collateral assets like USDe, BNSOL, and WBETH disanchored, the collapse in collateral value triggered massive liquidation. Forgiven pointed out that attackers may have exploited this and focused on pressing down the prices of specific assets like USDe, BNSOL, and WBETH on Binance, causing severe disanchoring. Data showed that the price of the global third-largest stablecoin - USDe - dropped to $0.65 on Binance, while it remained at $0.90 on other platforms during the same period. Forgiven believes that the extreme price drops of several alternative tokens only on Binance are signs of the piercing of primary market maker hedging portfolios. 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 in this turmoil. Many users claimed to have encountered account freezes, failure of stop-loss orders, and other issues during the market crash. More significantly, tokens like Enjin (ENJ) and Cosmos (ATOM) experienced "flash crashes" on Binance, dropping to zero and then quickly rebounding. This has led to accusations of market manipulation and profiteering amid chaos. Binance admitted that "violent market activity" caused delays and display issues, assuring users that their funds were safe (SAFU). Currently, Binance has announced that its system has been restored. However, this has not pacified the community's anger. Critics are calling for regulatory agencies to investigate, as this is not the first time Binance has faced accusations over similar incidents. In the end, while this leveraged-driven collapse was cruel, it also cleared the excessive risks accumulated in the market. As in many historical cases, the deleveraging process is part of the market cycle and will continue in the future. But this time, risk control issues of centralized and decentralized exchanges will continue to be in the spotlight. This article is a reprint from "Wall Street View" by author Long Yue; GMTEight editor: Yan Wencai.