CZ Rejects Binance’s Role in $19B October Liquidations; Industry Points to Systemic Leverage Risks
Former Binance CEO Changpeng Zhao (CZ) denied that Binance materially caused the October 10–12 liquidation wave that wiped out roughly $19.1 billion of leveraged crypto positions. In a Binance social Q&A he called claims the exchange triggered the cascade “absurd,” noting Bitcoin fell over 15% in 48 hours and liquidations were spread across major venues. CZ cited analytics showing Binance’s share of liquidations matched its market share and said the exchange’s risk-management and insurance fund performed as intended; he also noted a completed ~$600 million compensation program for verified technical-loss cases. Industry responses were mixed: OKX CEO Star Xu blamed aggressive marketing and potential collateral reuse in Binance-linked products (USDe) for creating dangerous feedback loops, while Wintermute founder Evgeny Gaevoy and several analysts argued the crash resulted from market-wide excessive leverage, thin liquidity and macro shocks (notably stronger-than-expected U.S. inflation data and tariff-related news) that prompted cross-exchange deleveraging. The episode revived calls for stricter leverage caps, clearer risk disclosures, improvements in collateral design and better exchange operational resilience. For traders: monitor liquidation metrics, funding rates and cross-exchange liquidity; prioritize position sizing and leverage controls, and watch macro data and policy news that can trigger rapid, system-wide deleveraging.
Neutral
The coverage centers on attribution of a past, large liquidation event rather than new positive or negative fundamentals for a single cryptocurrency. CZ’s denial and Binance’s explanations reduce the chance of an exchange-specific confidence shock tied solely to Binance, while industry critiques and calls for regulatory and product reforms underscore persistent systemic risks from excessive leverage and fragile liquidity. Short-term impact: heightened caution, potential volatility spikes when macro data arrives, and reduced appetite for high leverage — pressure that can be temporarily bearish for risky assets. Long-term impact: potential for improved risk controls and product design could stabilize markets, which is neutral-to-slightly-bullish if reforms are enacted. Overall, the net immediate effect on the primary crypto (BTC) is neutral because the event is framed as system-wide rather than exchange-specific, though volatility and downside risks remain elevated when macro shocks occur.