Following the Crypto Flash Crash on October 10, Anticipate a Surge of Legal Actions: Wintermute CEO

The date October 10 stood out in the crypto landscape. Certainly, Donald Trump took action following China’s update regarding restrictions on rare earth metal exports. Truth Social, X, that embodies classic Trump. The president is eager to demonstrate the dominance of the United States.

In reality: The announcement of new tariffs against China was not anticipated to induce a massive dump that evening. A -10% decline in Bitcoin would be extraordinary. Yet, circumstances rapidly declined on that October 10, and after what might be considered a relatively “minor” catalyst, the world’s leading crypto asset plummeted from over $120,000 to under $105,000 in just 15 brief minutes.

As reported by Coinglass, over $16Bn of leveraged trades, both long and short, were liquidated on October 10. This massive liquidation event marks October 10 as the largest single-day liquidation occurrence ever; a genuine crypto black swan incident.

(Source: Coinglass)

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What Transpired? Why Did Crypto Collapse? Manipulation or System Failure?

At first glance, it’s simple to pin the blame on Trump.

Yet, upon further inspection, Trump had no association with the “other” downturn apart from a slight correction that typically would result in Bitcoin USD and some of the top cryptocurrencies to purchase dropping a maximum of -10%.

Theories abound. Some lay blame on Binance, the largest cryptocurrency trading protocol globally, while others suggest this was merely insider trading.

For those who suspect the dump resulted from insider actions, they point to the significant shorts on BTC and ETH placed just prior to the decline on Hyperliquid.

As 99Bitcoins reported, the investor, purportedly linked to the Trump family, denied any connections and stated that the funds were from clients.

Conversely, some directly point fingers at Binance. From their viewpoint, the exchange intensified the downfall by allegedly withdrawing liquidity and (un)intentionally heightening volatility during what is typically a low activity Friday evening as traders ready for the weekend.

Whether it constituted a systemic breakdown is still debatable, but traders and market makers, including Wintermute, faced significant losses.

> Binance internal oracles cause $400B in liquidations in flash crash
> Binance offers $40M in “recovery airdrop”

> Founders claim Binance charges $5M+ in predatory token listing fees
> Binance threatens legal action

Are we spotting a trend here?
Get your funds off Binance.

— curb.sol (@CryptoCurb) October 14, 2025

An anonymous large holder using Binance lost over $450M when his BTC USDT long position was liquidated. Wintermute incurred over $300M in losses. Another hedge fund from China faced a loss exceeding $180M. The list continues.

A Market‑Maker Friend Speaks Out: What Exactly Happened on the Night of 10/11 at Binance | Let Data and Facts Speak
I used to do spot–futures arbitrage, I have quite a few market‑maker friends. Many of them knew, directly or indirectly, that I suffered heavy losses. Ironically,… pic.twitter.com/gUbH4LFaO9

— 812.eth (@GammaPure) October 20, 2025

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Lawsuits Are on the Horizon: Wintermute CEO

To pacify traders and hedge funds, Binance distributed incentives, airdropping BNB to meme coin traders on the Binance Smart Chain.

Nonetheless, this measure may not suffice. Analysts are now anticipating a surge of class action lawsuits targeting trading market manipulators, exchanges, and even market fluidity providers.

On X, Arthur Cheong, the CIO of DeFiance Capital, is already urging victims to contact him if they wish to take legal action against any CEX they believe could have mitigated their losses.

PSA to my friends:

If you suffered material losses on CEX during the flash crash of 10th October and would like to get advice on pursuing this further, feel free to dm me.

Have built up significant high-stakes commercial litigation experience so can give an informed view on it.

— Arthur (@Arthur_0x) October 19, 2025

Binance is likely to face potential legal actions.

In a recent podcast, Evgeny Gaevoy, CEO of Wintermute, stated they are already considering their legal options and plan to sue Binance due to the failure of their auto-deleveraging (ADL) systems. Gaevoy mentioned that their ADLs were triggered at completely irrational prices.

Wintermute CEO @EvgenyGaevoy on how they got ADL’d on Binance and predicts lawsuits and challenges from trading firms. pic.twitter.com/d2hGXoOOHc

— cryptotesters (@cryptotesters) October 20, 2025

Generally, centralized exchanges opt to ADL positions in times of extreme price swings to mitigate risks. Although it is considered a “last resort,” Gaevoy stated Wintermute had to cover positions at absurd and unjustified prices that didn’t represent actual trading market conditions.

He highlights a notification in which a short position was liquidated at 5X the legitimate trading market price, resulting in what he described as an immediate and impossible-to-hedge loss.

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