Former Binance chief executive Changpeng Zhao has rejected allegations that the exchange played a central role in the largest liquidation event the crypto market has ever seen, pushing back on claims that Binance intensified the sharp sell-off that unfolded in October.
Speaking during a recent question-and-answer session hosted on Binance’s social media channels, Zhao said accusations linking the exchange to the Oct. 10 crash were unfounded and exaggerated. The event saw roughly $19 billion in leveraged positions wiped out across crypto markets, triggering weeks of volatility that continue to weigh on prices.
According to Bloomberg, Zhao described assertions that Binance caused the liquidation cascade as “far-fetched,” adding that calls for the exchange to compensate all market losses ignore how liquidations function during extreme market stress.
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Why Binance became a focal point
The Oct. 10 sell-off placed Binance under scrutiny after Ethena’s USDe stablecoin briefly lost its dollar peg on the platform. During the height of the volatility, USDe fell as low as $0.65 on Binance before recovering.
The episode raised questions among traders about whether technical issues on the exchange had amplified broader market panic.
Ethena later attributed the dislocation to a Binance-specific internal oracle problem rather than a failure of USDe itself. Ethena Labs founder Guy Young said at the time that the price anomaly was confined to a single trading venue.
“The severe price discrepancy was isolated to one venue that referenced an oracle index from its own order book rather than the deepest liquidity pool,” Young said, noting that deposit and withdrawal disruptions prevented arbitrage traders from correcting the imbalance in real time.
Binance response and user compensation
Following internal reviews, Binance compensated affected users roughly $283 million, a move that acknowledged the platform-specific issue while stopping short of accepting responsibility for the wider market crash.
Zhao emphasized that the forced liquidations reflected systemic leverage across crypto markets rather than actions by any single exchange. Liquidation cascades occur when falling prices trigger automatic position closures, often accelerating declines during periods of thin liquidity.
Zhao’s role after stepping down
Zhao led Binance from its launch in 2017 until November 2023, when he resigned as CEO after pleading guilty to US federal charges tied to anti-money laundering violations. He later served a prison sentence related to the case and was pardoned by US President Donald Trump in October.
Because of that history, Zhao said he was speaking as a shareholder and user, not on behalf of Binance management.
Despite stepping away from day-to-day operations, Zhao remains active in the sector through YZi Labs, an investment firm that evolved from Binance’s former venture arm and oversees about $10 billion in assets.
Market impact still unfolding
The October liquidation shock marked a turning point for crypto markets. Bitcoin, which had traded above $126,000 in early October, slid below $80,000 by November.
The broader downturn erased more than $1 trillion in total crypto market capitalization from early October levels, highlighting how quickly leverage-driven rallies can unwind.
What investors are watching next
While prices have stabilized from their November lows, recovery has been uneven. Traders are now focused on exchange risk controls, oracle design, and liquidity resilience as regulators and market participants assess how infrastructure failures can ripple through highly leveraged markets.
Zhao’s remarks underscore a wider industry debate: whether exchanges should bear responsibility for technical breakdowns during extreme volatility, or whether such events are an unavoidable consequence of crypto’s market structure.
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