Changpeng Zhao Defiantly Rejects Claims Binance Fueled Historic Crypto Market Crash

In a decisive rebuttal that reverberated across global financial markets, former Binance CEO Changpeng ‘CZ’ Zhao has categorically rejected allegations that his exchange precipitated October’s catastrophic $19 billion cryptocurrency liquidation event. Speaking from an undisclosed location on Friday, Zhao labeled the claims as “far-fetched,” igniting a fresh debate about market causality and exchange accountability in the volatile digital asset space. This controversy unfolds as the broader crypto market, still reeling from the October crash, struggles to reclaim its trillion-dollar valuation losses.

Changpeng Zhao Denies Binance’s Role in Market Meltdown

During a live Q&A session broadcast on Binance’s official social media channels, Zhao directly addressed the growing narrative that Binance’s trading mechanisms were a primary catalyst for the October 10th sell-off. He firmly stated that the exchange was not a major contributor to the record wave of forced liquidations. “There are a larger group who claim the October 10th crash was caused by Binance and wants Binance to compensate everything,” Zhao remarked, according to a Bloomberg report. He dismissed these demands outright, framing the event as a complex market phenomenon rather than the result of a single entity’s actions.

Industry analysts note that pinpointing a single cause for such a widespread liquidation event is notoriously difficult. Typically, these events involve a confluence of factors including:

• High leverage ratios across derivative trading platforms.
• Correlated asset movements triggering cascading margin calls.
• Macroeconomic pressures affecting investor sentiment.
• Technical issues on specific trading venues.

Zhao’s comments aim to shift the analytical focus from Binance to this broader, systemic context. His perspective carries weight given his unique position; although he stepped down as CEO in November 2023 after a guilty plea to U.S. anti-money laundering violations, he remains a major shareholder and a highly influential voice. He emphasized he was speaking in a personal capacity, not as a company representative.

Anatomy of the October Crypto Liquidation Event

The October 10th market crash stands as the largest single liquidation event in cryptocurrency history. Data from multiple analytics firms confirms that approximately $19 billion in long and short positions were forcibly closed within a 24-hour window. This seismic event erased significant value, with Bitcoin (BTC) plummeting from above $126,000 in early October to briefly dip below $80,000 in November. The total cryptocurrency market capitalization shed over $1 trillion from its pre-crash peak.

The crash’s epicenter, according to many observers, was a sharp and unexpected depeg of Ethena’s USDe (USDE) stablecoin on the Binance exchange. During the peak of the volatility, USDe’s value deviated dramatically from its $1 peg, falling to approximately $0.65 on Binance. This dislocation created panic and exacerbated selling pressure across connected markets.

Ethena Labs Clarifies the Oracle Issue

In the aftermath, Ethena Labs founder Guy Young provided crucial technical context. He explained that the severe price discrepancy was isolated to Binance due to a platform-specific internal oracle issue. “The venue was also experiencing deposit and withdrawal issues during the event, which prevented market makers from closing the arbitrage loop,” Young stated. This technical explanation suggests the problem was related to Binance’s price feed mechanism rather than a fundamental flaw in the stablecoin itself or a deliberate action by the exchange.

Following this diagnosis, Binance took responsibility for the oracle failure’s impact on its users. The exchange compensated affected traders a total of approximately $283 million, a move seen as an effort to maintain trust and demonstrate accountability for platform-specific errors, if not for the broader market crash.

The Lasting Impact and Regulatory Scrutiny

More than three months later, the ripple effects of the October crash continue to shape the cryptocurrency landscape. Market recovery has been sluggish and fragmented, with investor confidence remaining fragile. The event has also intensified regulatory scrutiny on major exchanges, with authorities in multiple jurisdictions examining their risk management protocols, leverage offerings, and market surveillance capabilities.

Zhao’s personal history adds a complex layer to the current discourse. After pleading guilty to U.S. charges and serving a prison sentence, he was pardoned by U.S. President Donald Trump in October. He now oversees YZi Labs, an independent investment firm managing around $10 billion in assets that evolved from Binance’s venture arm. His continued activity ensures his views on market structure remain highly relevant, even as he has ruled out a formal return to Binance’s leadership.

Expert Analysis on Market Causality

Financial experts specializing in crypto markets often caution against attributing systemic crashes to single points of failure. Dr. Lena K. Chen, a professor of digital finance at Stanford University, notes, “While exchange-specific issues can act as a trigger, a $19 billion liquidation requires a tinderbox of pre-existing conditions—excessive leverage, concentrated positions, and negative macro signals. Isolating one exchange is an oversimplification of a deeply interconnected system.” This academic perspective supports Zhao’s contention that the accusations are overly simplistic.

A comparative analysis of major liquidation events reveals common patterns:

This table illustrates that the October 2024 event was unprecedented in scale, suggesting a unique or amplified set of contributing factors beyond any single exchange’s operations.

Conclusion

Changpeng Zhao’s forceful rejection of claims that Binance worsened the October crypto market crash highlights the ongoing challenge of assigning blame in complex, decentralized financial systems. While technical failures on the exchange, like the USDe oracle issue, undoubtedly contributed to localized volatility, the historic $19 billion liquidation likely stemmed from a perfect storm of high leverage, macroeconomic anxiety, and interconnected market risks. As the industry seeks stability and maturity, understanding these multifaceted causes—rather than seeking a single villain—will be crucial for building more resilient market structures and restoring lasting investor confidence. The debate over Binance’s role underscores the pressing need for clearer data, transparent exchange operations, and sophisticated risk management across the entire cryptocurrency ecosystem.

FAQs

Q1: What exactly did Changpeng Zhao deny?
Changpeng Zhao denied allegations that the Binance cryptocurrency exchange was a major cause or contributor to the historic $19 billion market-wide liquidation event that occurred on October 10, 2024. He called these claims “far-fetched.”

Q2: What was the USDe depeg incident on Binance?
During the October crash, Ethena’s USDe stablecoin lost its $1 peg, falling to around $0.65 specifically on Binance. Ethena Labs attributed this to an internal oracle issue on Binance’s platform that referenced its own order book, combined with deposit/withdrawal problems that prevented arbitrage.

Q3: Did Binance accept any responsibility for the crash?
Binance did not accept responsibility for causing the broader market crash. However, it did compensate users affected by the specific USDe depeg on its platform, paying out approximately $283 million for losses stemming from its internal oracle failure.

Q4: What is Changpeng Zhao’s current relationship to Binance?
Zhao stepped down as CEO in November 2023. He now speaks as a major shareholder and user of Binance, not as an official company representative. He remains active in crypto through YZi Labs, an independent investment firm.

Q5: How has the market performed since the October crash?
The market has struggled to fully recover. Bitcoin and the total crypto market capitalization remain significantly below their pre-October 2024 highs, with over $1 trillion in value still erased, indicating lasting damage to investor sentiment.