Apple - What is $RECYCLE.BIN in MAC?

Were you running Parallels Desktop with a Windows Virtual Machine?

These folders are created if you are using the Shared Folders feature in Parallels Desktop. You can disable it in Virtual Machine -> Configure -> Shared Folders.

These folders can be safely deleted if you don't care about their contents.

The shell running in Terminal uses $ to identify variables. So if you want to remove or edit (or reference in general) a file whose name contains a $ you need to protect/escape it

vi SYS\$OUT.txt

As the variable $RECYCLE most probably didn't exist, the variable got replaced by "nothing" in your case resulting in

rm -r .BIN

being run. This still doesn't fully explain what happened though because all you should have gotten is a rm: .BIN: No such file or directory error.

$RECYCLE.BIN is a hidden folder on Windows systems. It's the Recycle Bin, as you may have guessed. Did you by chance use this disk in a Windows machine at some time? That would explain how it arrived on the disk. Since it's in your Downloads folder, it's more likely that it was accidentally included with a .zip file that you extracted.