CZ Fires Back: Binance Not to Blame for Historic $19B Crypto Liquidation Carnage

Binance founder Changpeng Zhao slams accusations that his exchange triggered the market's single biggest liquidation event.

The $19 Billion Question

When a tidal wave of leveraged positions got wiped out in a 24-hour frenzy, fingers pointed squarely at the world's largest crypto platform. The narrative was simple: Binance's mechanics or actions sparked the domino effect that vaporized a record $19 billion from trader accounts. CZ's response was anything but simple—it was a flat-out rejection.

Mechanics of a Massacre

Liquidations on this scale don't happen in a vacuum. They require a perfect storm of over-leveraged bets, sudden price volatility, and cascading margin calls. Critics argued Binance's systems or a specific large trade acted as the pin that popped the bubble. CZ's counter-argument hinges on market structure—price feeds are aggregated, liquidation engines are automated, and in a decentralized global market, no single entity holds that kind of trigger.

The Blame Game in Crypto's Wild West

It's the oldest play in the finance book: when fortunes vanish, find a villain with deep pockets. Exchanges, especially dominant ones, are convenient targets for fury that should be directed at overconfidence and poor risk management. After all, what's a little personal responsibility when you can blame the casino for letting you bet the house? The episode highlights the industry's growing pains as it wrestles with the same scapegoating that plagues traditional markets, just with more volatility and fewer suits.

A Defining Moment for Accountability

This isn't just about defending a brand. CZ's pushback strikes at the core of how responsibility is assigned in digital asset markets. If the largest platform can be held liable for systemic liquidations, it sets a precedent that could stifle the very leverage products traders demand. The debate forces a uncomfortable question: in the pursuit of high returns, who really bears the risk—the trader or the platform facilitating the trade?

The fallout from a $19 billion shakeout leaves more than just wrecked portfolios. It leaves a battle line drawn over who controls the narrative when the music stops.

CZ Rejects Claims Binance Caused October 10 Crypto Crash

“There are a larger group who claim the October 10th crash was caused by Binance and wants Binance to compensate everything,” Zhao said, dismissing the idea that the exchange had triggered the liquidation cascade.

He stressed that he was speaking as a shareholder and user of the platform, not in an executive capacity.

Zhao stepped down as Binance’s chief executive in November 2023 after pleading guilty to US federal charges tied to anti-money laundering violations.

He later served a prison sentence but was pardoned by US President Donald TRUMP in October last year.

While no longer running the exchange, Zhao remains a prominent figure in the industry and now oversees YZi Labs, an investment firm that evolved from Binance’s former venture arm and manages about $10 billion in assets.

.@cz_binance to those who think Binance deliberately caused the 10/10 market crash: “if you are living in those world in your head, you are unlikely to be successful in the future.” https://t.co/FRmNS7TlA7

Binance came under particular scrutiny during the October turmoil after Ethena’s USDe stablecoin briefly lost its dollar peg on the exchange.

During the sell-off, USDe dropped as low as $0.65 on Binance before recovering. The incident was later linked to a platform-specific oracle issue rather than a broader problem with the stablecoin.

Ethena founder Guy Young said at the time that the price dislocation was confined to a single trading venue that relied on its own order book rather than deeper liquidity pools.

He added that temporary deposit and withdrawal issues prevented arbitrage traders from correcting the imbalance. Binance subsequently compensated affected users about $283 million.

$1T Crypto Wipeout Rekindles Debate Over Leverage and Risk

More than three months on, the market is still feeling the aftershocks. Bitcoin, which traded above $126,000 in early October, slid below $80,000 weeks later, dragging the wider market down with it.

The correction wiped out over $1 trillion in total crypto market value, fueling ongoing debate over leverage, risk management, and the role of major exchanges during periods of extreme volatility.

According to XS.com analyst Samer Hasn, a Federal Reserve stance that remains neutral to hawkish, combined with tensions in the Middle East, has reduced demand for speculative investments across crypto markets.

Meanwhile, Bitwise Chief Investment Officer Matt Hougan has said that gold’s surge past $5,000 an ounce and mounting uncertainty around US crypto legislation are shaping a critical moment for digital asset markets.