The 'USDE Collapse' Caused by Binance Oracle Vulnerability... Multiple Abnormal Trading Patterns Detected

The cryptocurrency market plunge that occurred on the 10th (local time) was recorded as the largest-ever liquidation event. According to CoinGlass, $19 billion worth of positions were liquidated in a single day and $65 billion of total open interest evaporated. This far exceeds the $1.2 billion liquidations during the COVID-19 crash in 2020 and the $1.6 billion at the time of the FTX collapse in 2022.

According to Cointelegraph on the 14th (local time), one of the key causes of this crash was Binance's internal oracle system. Orderbook forensic data showed that the exchange calculated the collateral value of three assets — USDE, bnSOL, and wBETH — based on internal order book data rather than an external oracle. This exposed investors using 'Unified Account' to the risk of mass liquidations during abnormal price movements.

Some analysts suggested the plunge on the 10th might have been an 'organized attack' rather than a simple system failure, but no clear evidence has yet been found. Liquidations related to USDE alone amounted to about $346 million, followed by $169 million for wBETH and $77 million for bnSOL. In particular, a large amount of buy-side liquidity suddenly disappearing from the USDE/USDT pair was identified as an abnormal movement.

According to data provided by AI-based market analytics firm Rena Labs, USDe's average liquidity was about $89 million before and after the incident, but it plunged 74% to about $23 million between 21:40 and 21:55 (UTC). Liquidity then evaporated to around $2 million, and the buy-sell spread widened to 22%. Trading volume increased 896-fold compared to usual, and 92% of all orders were sell orders.

Rena Labs' abnormal-trade detection system detected abnormal trading patterns starting around 21:00, roughly an hour before the incident. The anomalies detected at that time numbered 28—four times the usual amount—and included repeated large orders and spoofing signals. In particular, consecutive large orders were observed at the moment Bitcoin's price began to decline across major exchanges.

Experts said the incident once again exposed the structural vulnerabilities of the crypto market. If liquidity for a given asset is thin and market makers (MM) withdraw, even tokens considered stable can collapse in an instant. Cointelegraph analyzed, "USDE's de-pegging shows that the crypto market still relies on excessive leverage and a fragile liquidity structure."