Binance Says Fake Cease-and-Desist Fueled Insolvency Rumors on Social Media
What Sparked the Latest Claims About Binance?
Binance has denied issuing a cease-and-desist notice after a social media post alleging the exchange’s insolvency spread widely online. The controversy began on Wednesday when X user Lewsiphur claimed that Binance was insolvent and warned of what he described as a “catastrophic” impact on crypto markets, exceeding the fallout from FTX.
Hours later, the user uploaded an image of what he said was a cease-and-desist letter from Binance, threatening legal action unless the original post was deleted by 5 p.m. ET. The image circulated quickly, with other users reposting both the insolvency claim and the alleged legal notice.
Binance responded publicly, rejecting the document’s authenticity and pushing back against the narrative gaining traction on social media.
Investor Takeaway
How Did Binance Respond?
Binance addressed the situation through its official customer support account on X, calling the uploaded letter a fabrication. “This letter is not from Binance,” the account wrote. “It’s a forgery with a very active imagination. Please stay alert to fake documents and misleading information.”
Despite the letter’s stated deadline, the original insolvency post remained live at the time of publication. In follow-up posts, the user said he planned to host a livestream to present evidence supporting his claims, while also promoting an online casino.
The exchange has not announced any legal action tied to the post, nor has it indicated that it contacted the user privately. Its response has been limited to disputing the authenticity of the document and warning users about misinformation.
Why Insolvency Rumors Persist Around Binance
The incident comes against a backdrop of ongoing speculation about Binance’s financial health within parts of the crypto community. In recent weeks, claims of insolvency have resurfaced, often linked to allegations that the exchange contributed to a sharp market downturn in October 2025.
During that episode, users reported frozen accounts, failed trades, and delays in deposits and withdrawals amid extreme volatility. The market move was largely attributed to macro pressure, heavy leverage, and thin liquidity across venues. Binance has rejected claims that it played a role in triggering the crash.
Former chief executive Changpeng Zhao addressed the accusations during public question-and-answer sessions, describing them as “far-fetched.” The exchange has continued to state that it remains solvent and able to process user withdrawals.
Investor Takeaway
How the Community Reaction Is Playing Out
Distrust tied to past market stress has led some users to call for coordinated withdrawals from centralized exchanges into self-custody wallets. That sentiment has continued to circulate alongside the latest claims, adding to ongoing fear, uncertainty, and doubt surrounding Binance.
Yi He, a co-founder of Binance, commented publicly on the withdrawal calls, framing them as a form of pressure test for trading venues. “Some friends in the community have initiated a withdrawal campaign,” she said. “Although the number of assets in Binance addresses has increased after the campaign was launched, I believe that regularly initiating withdrawals from all trading platforms is a very effective stress test.”
For now, the exchange’s stance remains unchanged. It disputes the authenticity of the cease-and-desist letter, denies insolvency claims, and points to continued asset flows on-chain as evidence that customer activity remains intact.
