Cryptocurrency exchange Binance has unveiled a USD $400 million compensation initiative aimed at restoring user confidence following widespread operational disruptions and massive liquidations during a dramatic market collapse last week.
The world’s largest crypto exchange announced its “Together Initiative” on Tuesday. It seeks to compensate users who suffered losses from forced liquidations during a market downturn that saw nearly USD $20 billion wiped out in 24 hours. The initiative also aims to support affected institutional partners.
Of the total, USD $300 million will be distributed in USDC stablecoin to eligible retail users. These individuals experienced losses from forced liquidations in futures and margin trading between 00:00 UTC on October 10 and 23:59 UTC on October 11. Each qualified user stands to receive between USD $4 and USD $6,000. Eligibility is based on factors including the loss amount and a loss ratio that must represent at least 30% of their net assets, determined by a snapshot taken at 23:59 UTC on October 9. A minimum loss equivalent to USD $50 is required.
Binance also allocated USD $100 million to a low-interest loan fund for institutional and ecosystem participants. This fund is designed to inject momentum into recovery efforts, alleviate liquidity pressures, and maintain stable operations for severely impacted entities.
During the extreme turbulence, Binance acknowledged severe operational issues on its platform. Users reported delays in order execution, failures in stop-loss functions, erroneous balance and chart displays, API latency, temporary withdrawal suspensions, and general freezes across its mobile application and website. The stablecoin USDe also lost its peg on the platform, briefly falling to 65 cents.
The market chaos was triggered by an announcement from former U.S. President Donald Trump, indicating plans to impose a 100% tariff on products imported from China. This news sent global markets into a risk-averse spiral, leading to the liquidation of approximately 1.7 million crypto traders. Bitcoin plummeted by nearly USD $17,000 in a matter of hours, contributing to a USD $500 billion loss in the total crypto market capitalization.
Binance executives, including co-founder and Head of Customer Service Yi He, publicly apologized over the weekend for the incidents. The exchange had previously distributed USD $283 million in two rounds to compensate holders of de-pegged tokens such as USDe, BNSOL, and WBETH.
While presenting the “Together Initiative,” Binance emphasized that the effort does not imply an acceptance of responsibility for user losses. Instead, it frames the move as a commitment to its “user focus” and a belief in the long-term development of the cryptocurrency industry. The company reminded users of the market’s inherent volatility and the need for rational investment.
The initiative comes amid increasing scrutiny of centralized exchanges regarding transparency and data handling following large-scale liquidation events. Bitcoin currently trades around USD $112,800, having declined by nearly 2% in the last 24 hours, with broader market losses extending across other cryptocurrencies.