CZ Rejects Claims Binance Fueled Historic Crypto‑Liquidation Crash
Former Binance founder Changpeng “CZ” Zhao says the exchange was not a primary driver of the October 10 market collapse that wiped out roughly $19 billion in leveraged positions.
LONDON, Jan 31 2026 – In a live Q&A on Binance’s official social‑media channels, Changpeng Zhao, the platform’s co‑founder and former chief executive, pushed back against growing allegations that Binance was a major catalyst for the record‑setting wave of forced liquidations that hit the crypto market on October 10, 2023. Zhao characterised the accusations as “far‑fetched” and stressed that any expectation for Binance to compensate market participants is unfounded.
Background to the October 10 Crash
On October 10, a rapid price decline across major crypto assets triggered the largest liquidation event in the sector’s history, erasing an estimated $19 billion in open positions. Bitcoin, which had briefly surged past $126 000 earlier in the month, fell below $80 000 in the following weeks, contributing to a market‑wide contraction that has since erased more than $1 trillion of total market capitalization.
During the turmoil, Binance’s USDe stablecoin (issued by Ethena) briefly detached from its $1 peg, trading as low as $0.65 on the exchange. The de‑peg was later traced to a platform‑specific oracle malfunction that relied on Binance’s order book rather than deeper liquidity pools. Ethena’s founder, Guy Young, described the price anomaly as isolated to a single venue and linked it to concurrent deposit‑withdrawal issues that hampered arbitrage activity.
Binance subsequently reimbursed affected users with approximately $283 million, a move that the exchange highlighted as a remedial measure rather than an admission of systemic fault.
CZ’s Position
Although Zhao stepped down as Binance CEO in November 2023 after pleading guilty to U.S. anti‑money‑laundering charges—and later received a presidential pardon—he remains a significant shareholder and active participant in the crypto ecosystem. In the Q&A, Zhao emphasized that he was speaking as a private investor and user, not as an official representative of the exchange.
He denied any direct involvement of Binance in the cascade of liquidations, stating that the platform was merely one of many venues where traders executed positions. “There is a broader coalition that tries to pin the entire crash on Binance and seeks compensation from us,” Zhao said. “Those claims do not reflect the reality of how the market functions.”
Industry Reaction
Analysts have pointed out that while Binance’s order‑book data can influence price discovery, the scale of the October 10 liquidations far exceeded the impact any single exchange could generate. “The market was already under extreme stress from macro‑economic factors, tightening liquidity, and high leverage ratios,” said Laura Méndez, senior research analyst at CryptoQuant. “Assigning primary blame to Binance overlooks the systemic nature of the event.”
Other exchanges and trading platforms have faced similar scrutiny, but no conclusive evidence has emerged linking a single venue to the magnitude of the crash. Regulatory bodies continue to examine the broader role of high‑frequency trading, oracle reliability, and leveraged product design in preventing future systemic shocks.
Key Takeaways
- CZ’s denial: Changpeng Zhao refutes claims that Binance was a chief cause of the October 10 2023 liquidation storm, labeling the accusations as speculative.
- Scale of the event: Approximately $19 billion in leveraged positions were liquidated, leading to a market‑wide decline of over $1 trillion in market cap.
- USDe de‑peg: A temporary price dislocation of the USDe stablecoin on Binance was linked to an internal oracle issue, not a broader market failure. Binance compensated users with roughly $283 million for the incident.
- Regulatory context: Zhao’s past legal issues and subsequent pardon underscore the ongoing scrutiny of major crypto exchanges, but the current debate centers on market mechanics rather than legal liability.
- Systemic risk factors: High leverage, macro‑economic pressures, and fragmented oracle data contributed to the crash, suggesting that responsibility is diffused across the ecosystem rather than concentrated on a single platform.
The discussion highlights the challenges of attributing causality in a decentralized market where multiple nodes, exchanges, and protocols interact. As the crypto sector continues to grapple with liquidity shocks and regulatory scrutiny, the October 10 episode remains a case study in the importance of robust price‑feed infrastructure and prudent risk management across the industry.
Source: https://cointelegraph.com/news/cz-denies-binance-role-october-crypto-liquidation-usde-depeg?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
