Around $60–90 million USDe was dumped on Binance, along with wBETH and BNSOL, to exploit a vulnerability in the pricing system, where collateral was valued based on Binance's order book, not external oracles.
This localized price deviation triggered forced liquidations of $500–$1 billion, triggered a $19+ billion cascade across the market, and netted the attackers around $192 million in profit thanks to pre-existing 1.1 billion BTC/ETH shorts on Hyperliquid – minutes before the Trump tariff announcement.
This wasn't a USDe failure – the problem was a Binance bug, exploited amidst the macro panic.
What looked like chaos turned out to be a planned exploitation of Binance's internal pricing system, amplified by the macro shock and excessive leverage in the system.
Preparation
Binance, through its Unified Account, allowed the use of USDe, wBETH, and BNSOL as collateral.
However, this was not based on oracles or buyback prices, but on Binance's own spot prices, which created a serious vulnerability.
On October 6, Binance announced the transition to oracle pricing, but the implementation was not scheduled until October 14, leaving an eight-day window for attack.
Exploitation
During this period, well-organized participants began manipulating the Binance order book, draining approximately 60-90 million USDe, causing the price on Binance to fall to 0.65, while on other exchanges it remained around 1.
Since Binance's collateral system used internal prices, this instantly wiped out the margin and triggered forced liquidations of 500 million to 1 billion.
Then came the news of Trump's 100% tariffs on China, fueling panic and liquidity problems.
Profit Mechanism
That same day, new wallets on Hyperliquid opened 1.1 billion short positions on BTC and ETH, funded by 110 million USDC from sources linked to Arbitrum.
When a cascade of liquidations on Binance crashed BTC and ETH prices, these positions generated approximately 192 million net profit after closing at the lows.
The coincidence of timing, precision, and funding channels suggests coordinated action.
Chain Reaction
Liquidations on Binance led to massive selling of BTC, ETH, and altcoins on thin order books.
Other exchanges began to replicate the decline through bots and cross-marketing algorithms.
Market makers hedging on multiple exchanges were forced to dump positions everywhere.
Result: over $19 billion in global liquidations, many altcoins fell 50-70% in a day – all due to less than $100 million in manipulated collateral.
Who's to blame?
• Binance: an architectural error and a delay in implementing oracles are the main reasons.
• Attackers: exploited and synchronized the manipulation, profiting from external shorts.
• Ethena (USDe): not at fault – the protocol remained fully collateralized, buybacks proceeded normally, and the exchange rate held 1:1 on all other platforms.
Consequences
Binance acknowledged "technical issues on the platform," promised compensation to affected users (margin, futures, and credit accounts), and implemented minimum price thresholds and oracle integration.
USDe continued to operate without disruption, and the incident became a clear example of how a flaw in an exchange's pricing system can lead to cascading liquidations across the entire market.
Result: Around $90 million in USDe liquidated on Binance and $1.1 billion in shorts on another market triggered a $19 billion crash.
This isn't a stablecoin failure, but a masterclass in exploiting flawed collateral valuation during a macro storm.
