Ex-Binance CEO CZ Rejects Claims Exchange Caused $19B October Liquidation
What Did Zhao Say About the October 10 Liquidation Event?
Former Binance CEO Changpeng “CZ” Zhao has rejected claims that the exchange played a central role in what has been described as the largest liquidation event in crypto history. The Oct. 10 sell-off wiped out roughly $19 billion in leveraged positions across the market, with volatility continuing to weigh on prices months later.
Speaking during a question-and-answer session on Binance’s social media channels, Zhao dismissed accusations that Binance triggered or amplified the crash. According to Bloomberg, he described the claims as “far-fetched” and said the exchange should not be held responsible for market-wide liquidations.
“There are a larger group who claim the October 10th crash was caused by Binance and wants Binance to compensate everything,” Zhao said, rejecting the allegations. He added that he was speaking in his capacity as a Binance shareholder and user, rather than as a representative of the company.
Investor Takeaway
Why Binance Was Drawn Into the Post-Crash Debate
Binance faced heightened attention after the October crash due to a sharp, short-lived depeg in Ethena’s USDe stablecoin on the platform. During the sell-off, USDe dropped from its intended $1 level to around $0.65 on Binance, raising questions about market integrity and risk controls at the exchange.
The price break was later attributed to an internal oracle issue specific to Binance rather than a flaw in USDe itself. Ethena Labs founder Guy Young said the disruption did not reflect broader market pricing.
“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. “The venue was also experiencing deposit and withdrawal issues during the event, which prevented market makers from closing the arbitrage loop.”
Following the incident, Binance compensated affected users roughly $283 million, a move that helped contain immediate fallout but did not end scrutiny over the exchange’s role during the crash.
How Market Structure Amplified the Sell-Off
Beyond the USDe episode, the October liquidation wave reflected the scale of leverage embedded across crypto derivatives markets. When prices turned sharply lower, automated liquidations cascaded across venues, accelerating losses and draining liquidity.
Bitcoin, which traded above $126,000 in early October, slid below $80,000 by November. The broader market followed, with more than $1 trillion in total crypto market capitalization erased from early October levels. The speed of the decline left little room for manual intervention by exchanges once margin thresholds were breached.
In that context, critics argue that large venues play an outsized role in shaping outcomes during stress events, even when problems originate elsewhere. Supporters counter that exchanges are executing predefined risk rules rather than directing market behavior.
Zhao’s remarks align with that latter view, framing the crash as a systemic leverage unwind rather than the result of any single platform’s actions.
Investor Takeaway
Zhao’s Role After Stepping Down From Binance
Zhao led Binance from its founding in 2017 until stepping down as CEO in November 2023 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 U.S. President Donald Trump last October.
Although he no longer runs the exchange, Zhao remains active in the crypto sector. He now oversees YZi Labs, an investment firm that evolved from Binance’s former venture capital arm and manages about $10 billion in assets.
That continued presence has kept Zhao closely linked to Binance in the public eye, even as he stresses a separation between his current activities and the exchange’s operations.
What the October Crash Still Means for the Market
More than three months after the liquidation event, crypto markets have yet to regain their earlier momentum. Prices remain sensitive to leverage, funding rates, and exchange-specific risks, with traders more cautious about assuming that liquidity will hold during sharp moves.
The debate over Binance’s role highlights a broader question facing the industry: how responsibility should be assigned when automated systems and interconnected venues interact under stress. As leverage rebuilds, similar tests are likely to return, keeping scrutiny on exchanges, stablecoin mechanics, and the risk models that govern modern crypto trading.
