CZ Denies Binance Role in $19B Crypto Liquidation Crash

CZ Refutes Claims Binance Caused $19B October Crash

Former Binance CEO Changpeng “CZ” Zhao has pushed back against allegations that the exchange was responsible for the largest single-day liquidation event in crypto history. During a social media Q&A session, Zhao labeled claims that Binance's actions triggered the October 10 sell-off as “far-fetched.” The event saw approximately $19 billion in positions forcibly closed across the market, and its effects continue to weigh on market sentiment over three months later.

Zhao, who stepped down as CEO in November 2023, clarified that he was speaking as a shareholder and user, not as a formal representative of the exchange. He noted a vocal group of market participants believe Binance should offer compensation for the broad market losses, a notion he firmly rejected. Zhao now heads YZi Labs, an independent investment firm managing about $10 billion in assets that evolved from Binance's former venture arm.

USDe Depeg to $0.65 on Binance Fuels Scrutiny

Accusations against the exchange intensified during the crash when Ethena’s USDe stablecoin experienced a sharp depeg on Binance. The asset, designed to maintain a $1 value, plunged to a low of approximately $0.65 on the platform. This dislocation created significant turmoil and contributed to cascading liquidations for traders using the stablecoin as collateral.

Ethena Labs founder Guy Young later stated the issue was isolated to Binance. He attributed the depeg to an internal oracle issue on the exchange, which was using its own order book for price references instead of deeper liquidity pools. Compounding the problem, deposit and withdrawal issues on Binance reportedly prevented arbitrageurs from stabilizing the price. In response to the incident, Binance compensated affected users to the sum of $283 million.

Crypto Market Loses $1T Following October Liquidation

The October 10 crash marked a significant turning point for the digital asset market, which has struggled to regain its footing since. The total crypto market capitalization has fallen by over $1 trillion from its early October levels. Bitcoin, which traded above $126,000 before the event, saw its price fall below $80,000 in November, reflecting the sustained pressure on the industry's leading assets.