Cathie Wood: "October 2025 crypto crash, Binance is not the culprit"

▲ Cryptocurrency decline/AI generated image

The debate surrounding Binance's responsibility for the massive flash crash that hit the cryptocurrency market on October 10, 2025, is once again being re-evaluated. ARK Invest CEO Cathie Wood has retracted her previous statements, clarifying that Binance was not the entity that triggered the crash, reigniting the discussion about the cause of the market collapse.

According to CCN on May 8 (local time), Wood stated, “We know there was a software glitch, but Binance did not trigger the flash crash on October 10.” She added, “I want everyone to understand this. We know it wasn't Binance.”

This statement comes as a clarification after Wood linked the October crash to a software glitch at Binance in an interview with Fox Business in January. At the time, Wood described the incident as a forced deleveraging event and estimated that approximately $28 billion had evaporated from the overall cryptocurrency market. Her remarks quickly spread through social media and trading communities, fostering the perception that Binance's infrastructure issues directly caused the entire market collapse.

Through this correction, Wood explained that the initial trigger for the crash and exchange-level technical issues were conflated in the interpretation. CCN reported that Wood's latest statement shifts the weight towards Binance potentially exacerbating some liquidations amid extreme volatility, but not being the initiator of the widespread sell-off.

At the time, the market was already vulnerable due to tariff concerns related to US President Donald Trump's policy announcements and macroeconomic pressures. Bitcoin (BTC) was trading above $120,000 but rapidly lost momentum, and excessive leverage and thin liquidity across the derivatives market accelerated the decline.

Forced liquidations spread across centralized exchanges within hours. Reports at the time estimated that over $14 billion, and possibly close to $19 billion, in leveraged positions were wiped out. Millions of trading accounts were affected, and the cascading failure of long positions marked the event as one of the largest liquidation days in cryptocurrency history.

Binance was one of the exchanges at the center of the market chaos. During a period of extreme volatility, Binance experienced delays and system strain linked to abnormally high traffic. Some users experienced transmission issues for about 30 minutes, and some collateral assets showed temporary unstable flows under pressure.

One of the biggest controversies involved Ethena's USDe. USDe traded significantly below its target price on Binance during the peak of the turmoil, and this de-peg reportedly triggered additional liquidations for traders using USDe as collateral. Binance later acknowledged service delays and announced a policy to review compensation for users affected by platform-related technical issues.

However, Binance maintained that its core matching engine and risk systems operated normally throughout the widespread market collapse. According to the company's stance, most liquidations had already occurred before platform-specific issues reached their peak. This distinction aligns with Wood's recent corrective statement.

The October flash crash ended in a few hours, but its aftermath lasted for several months. Following the liquidation cascade, the cryptocurrency market was stuck with weak momentum, reduced confidence, and a risk-off sentiment. Surviving traders significantly reduced leverage or exited the market, and Bitcoin and major altcoins struggled to recover their previous highs.

CCN reported that this incident simultaneously revealed structural weaknesses such as excessive leverage, fragile liquidity in stressful situations, stablecoin collateral risks, exchange infrastructure bottlenecks, and reliance on centralized exchanges. Wood's corrective statement recontextualized the October crash not as a single exchange failure, but as a market-wide liquidation event where macroeconomic pressures, excessive leverage, fragile liquidity, and technical strains all converged.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*