Binance 10·10 Matching Engine Outage: The Silenced Truth
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At 5:00 AM Beijing time (5:00 PM Eastern), buy orders on Binance began to be massively withdrawn. In traditional markets (like NASDAQ or other U.S. stock exchanges), such a “vacuum” is almost impossible — and certainly not isolated to a single venue. 1. The Strongest Evidence Available Online (Data Acquisition Authenticity Screen-Recorded) Below is BTC/USDT perpetual futures order book data a few hours before the incident. Around 4:55, a small portion of bids exceeded asks, but there was still sufficient buying depth. By By 5:10, the bids and asks visibly crossed — a prolonged crossed market, signaling matching engine failure. Around 5:20, which marked the lowest prices across many coins, altcoin bids fell into a complete vacuum. Both the Order Ingress Queue and matching queue were heavily congested. The engine could not process incoming orders in time. 2. Major Market Makers' Cross-Exchange Trading Locked Down—Twilight of the Gods After buy-side liquidity vanished, major market makers who should have been obligated to provide quotes and support the market faced cross-exchange trading difficulties due to Binance's withdrawal congestion. Market makers like Wintermute, with priority channels and high-speed order placement capabilities, can normally execute even during extreme conditions when the matching engine is overloaded. However, their liquidity is limited. After Binance's order book issues caused price crashes, Wintermute's CEO described being unable to withdraw coins purchased on Binance to sell on Coinbase—preventing them from obtaining funds to redeposit on Binance to maintain buy-side support. For example, DOGE fell to $0.095 on Binance, while it was $0.17 on Coinbase at the same time. If Binance hadn't experienced various technical issues, would a "buy-side vacuum" really occur? The answer is clearly no. Consider normal market conditions: when Galaxy Digital sold 80,000 BTC, Bitcoin dropped from $118,000 to $115,000. On October 11, with no major on-chain anomalies detected, Bitcoin plummeted from $117,000 to $101,500 in 30 minutes. – Almost all sell-side liquidity disappeared in the options market; – Option buy orders continued stacking up, with actual transaction prices far exceeding fair values calculated by the Black-Scholes model. In other words, people wanting to buy never truly disappeared—they simply couldn't buy due to various technical reasons. 。 If you could buy ATOM at $0.0001, wouldn't you? Obviously you would. Now let's examine the situation for ordinary quant firms and retail traders at the bottom of the food chain. 3、 Quants and Retail Wiped Out Without Priority Exchange Access During this trading anomaly, without access to low-latency matching channels, quant traders and retail investors were completely locked out of the system. Multiple market maker friends reported experiencing hundreds of order retry attempts during the incident. Even ReduceOnly orders (the highest system priority for position reduction) couldn't execute, continuously encountering 503 (Service Unavailable) and -1008 (Service Overloaded) errors—all fully logged. ReduceOnly orders failed to go through; Taker and Maker orders had even less chance.. Bottom-fishing buy orders were universally rejected. In the end, retail traders—who understood the underlying truth least and created no pressure on the overloaded system—were labeled "gamblers" and bore the greatest losses. Their margin was carved up by counterparties and the exchange. 4、 Collapse of Fake Liquidity Does Binance engage in wash trading? Especially among altcoins that crashed to near-zero during the 10·11 incident — such as ATOM . Artificial liquidity made the market look vibrant — fake depth lured users into an illusion. 5、 Comparison with Fair, Regulated Markets Are Binance's market makers actually Binance itself? Does Binance still control a market maker like Sigma Chain—as the SEC once alleged? Was the buy order withdrawal purely a system malfunction or intentional by Binance? I cannot verify this. But regardless, market making should follow basic rules. In traditional markets like NASDAQ, market maker regulations are extremely strict. Take Rules 4613 and 4619 as examples:
Wash Trading is strictly prohibited, with clear role separation between market makers and exchanges. Under such reasonable and fair frameworks, a "sudden buy-side vacuum" without major news or concentrated selling pressure is virtually impossible. Because a stable closed loop forms between the exchange, users, and market makers. In Binance's regulatory vacuum, the situation is completely opposite: Frequent API errors, severely imbalanced order books, and it's unknown whether user funds are being misappropriated to manipulate market prices. There's extreme incentive misalignment between the outsourced teams maintaining the trading system and the exchange. Do they have sufficient motivation to ensure smooth operation of a system generating $70 million in matching fees daily? 6、 The Universe's #1 Exchange in a Regulatory Vacuum In this incident:
They weren't blind gamblers, yet became sacrifices for Binance's hundred-billion-dollar valuation. In a market with virtually no regulatory constraints, when an exchange permits such buy-side vacuums, it's no longer intermediating between buyers and sellers—it's directly counter-trading with users. And users always lose. 7、 Public Request for Evidence We request Binance submit a "platform-level minimal proof package" (unrelated to any individual account) by October 31： 1） Pricing/Mark Price/Price Bands Mark price per second + algorithm version Index components/weights/clipping logs (full data for those minutes) Price bands (upper/lower) per second + "out-of-band rejection volume" per second + manual intervention status 2）Liquidation/ADL (System Level) Liquidation/ADL order volume and notional, queue length, matching resource allocation (per second) Risk engine version and parameter changes (event window ±1 hour): MMR tables, ADL rules, change logs 3）Insurance Fund Balance and transactions (per second, including accounts/counterparties) Funding gaps and disposal priorities (capital injection/suspension/call auction/price band adjustment) 4）Matching Neutrality / Proprietary Net Selling "No Proprietary Net Selling Statement" + Merkle root of proprietary/affiliated account set Proprietary net Delta and market-making net Delta per-second summary during event window (fields may be anonymized) 5）Operations and Change Control Event window ±1 hour: "freeze/approval records" and version hashes for parameters/code/rate limit thresholds Overall platform health: p50/p95 latency, error rate, availability per second; call auction/circuit breaker trigger records The truth grows clearer through debate. submitted by /u/LocalLive2264 |
