CZ Pushes Back on Claims Linking Binance to Historic Crypto Liquidation Event

• CZ says Binance did not cause the $19B crypto crash.
• The USDe dip was a technical glitch, and users were compensated.

Changpeng Zhao, commonly called CZ, has strongly denied the claims that Binance caused the biggest liquidation event in the crypto market. This liquidation wiped out around $19 billion in leveraged positions on October 10. He denied all the allegations on Binance that the liquidations were incorrect during the speaking sessions held on Binance’s social media channel. 

CZ replied to the Allegation

After October 10, the market crashed heavily, and some traders claimed that Binance triggered the sell-off and that the exchange caused forced liquidations. They say that Binance should compensate for all the losses. Changpeng replied to all these claims by calling them “Far-fetched.”

He said, “People are saying Binance caused the crash and should pay for everything,” Zhao said, calling the accusations far-fetched.”

He also made it clear that he was speaking as a shareholder and user, not as a Binance executive, and he stepped down from the Binance CEO position in November 2023 after pleading guilty to the U.S. federal charges for anti-money laundering violations. Although he is no longer running Binance, right now he runs YZi Labs, which is an investment firm managing around $10 billion in assets.

During the October crash, attention focused on USDe, which is a Stablecoin issued by Ethena. USDe lost its dollar peg on Binance, and its price fell to $0.65 on the exchange, which raised fears that Binance caused broader market panic. 

Reason Behind the Ethena Founder’s Blame

Gut Young, Founder of Ethena, has explained that the issue was not a system-wide stablecoin failure; it was caused by the Binance-specific oracle problem. Binance relied on its internal order book instead of broader liquidity pools, and temporary deposit and withdrawal issues stopped arbitrage traders from correcting prices. 

Binance has paid $283 million to compensate the affected users despite the allegations. The liquidation was driven by high leverage and market volatility, and Binance has not yet proven to have caused the crash. This shows how technical issues can worsen panic and why exchanges face the blame during the crashes.

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