Binance’s CZ rejects claim exchange sparked $19B October crypto crash
Changpeng “CZ” Zhao, Binance co-founder and former CEO, denied that Binance caused the single-day $19 billion liquidation event on October 10. In a live AMA, CZ called the allegation “far-fetched,” saying it ignored broader market dynamics. The sell-off was driven by record liquidations of leveraged positions and cross-exchange price dislocations after a brief depeg of Ethena’s USDe stablecoin and reported technical issues on multiple venues. Binance has since compensated affected users—reports place the total at roughly $283M in earlier accounts and about $600M in later reporting—and says platform faults have been fixed. CZ also noted Binance’s regulatory status in Abu Dhabi and ongoing US monitoring; recent developments include his presidential pardon and progress toward removing a compliance monitor for Binance. For traders: the event highlights acute risks from leverage, oracle and deposit/withdrawal failures, and exchange-specific pricing anomalies. Compensation reduces direct counterparty risk but may not fully restore liquidity or market confidence; traders should reassess margin exposure, monitor cross-exchange spreads, and expect continued volatility in the short term.
Bearish
The news is broadly bearish for crypto market sentiment. A $19B single-day liquidation is a large negative shock that increases short-term selling pressure and liquidity stress. Reports of exchange-specific problems (oracle/depeg, deposit/withdrawal issues and technical glitches) elevate counterparty risk and can widen cross-exchange spreads, causing traders to reduce leverage and demand higher funding costs. Although Binance’s compensation (reported between $283M and $600M) limits direct counterparty losses for some users, it does not immediately restore market liquidity or confidence; structural vulnerabilities remain highlighted. Short-term impact: heightened volatility, reduced leverage tolerance, possible further price downside as risk-off positioning persists. Long-term impact: depends on regulatory outcomes and infrastructure fixes—if exchanges improve oracles, monitoring, and resilience, confidence could recover; if similar failures recur or regulatory pressure intensifies, sustained negative sentiment may keep prices suppressed. Overall, immediate effect is negative for price action.