Key Insights:
- CZ refuted the claim that Binance had caused the October 10 cryptocurrency crash and denied any responsibility for the liquidation.
- The USDe briefly lost its peg on Binance due to a localized oracle issue.
- The market lost more than $1 trillion as volatility spread across crypto markets.
October 10 crypto crash allegations have resurfaced as former Binance chief executive Changpeng “CZ” Zhao publicly rejected claims that the exchange played a central role in the largest liquidation event in crypto history.
CZ Responds to Liquidation Allegations
Speaking during a question-and-answer session on Binance’s official social media channels, Changpeng Zhao denied that Binance was a major contributor to the October 10 crypto crash.
According to Bloomberg, Zhao described assertions that Binance caused the liquidation cascade as “far-fetched” and said some market participants were wrongly assigning blame for losses suffered during the crash.
In addition, Zhao explained that his comments were as a shareholder and user of the platform, not as an executive. He stepped down as Binance’s chief executive in November 2023 after pleading guilty to U.S. federal charges related to anti-money laundering violations.
Zhao later served a prison sentence connected to the case and was pardoned by U.S. President Donald Trump in October last year. Since then, he has returned to the cryptocurrency industry as a consultant and advisor.
Exchange Scrutiny During the October 10 Crypto Crash
Binance faced heightened scrutiny during the October turmoil after Ethena’s USDe stablecoin briefly lost its dollar peg on the exchange.
In the sell-off, USDe dropped to as low as $0.65 on Binance before recovering. Subsequent reviews linked the price dislocation to a platform-specific oracle issue rather than a structural problem with the stablecoin itself.
More than three months after the sell-off wiped out an estimated $19 billion in leveraged positions, Zhao said accusations against Binance mischaracterize what occurred during the extreme market volatility.
The crypto crash that occurred on October 10 not only criticised Binance but also other trading platforms, such as Bybit and Hyperliquid.
According to market participants, Binance’s internal oracle mispriced assets during the crash, resulting in forced liquidations of thousands of accounts. Such assertions heightened the exchange’s risk-control measures during periods of extreme volatility.
Stablecoin Dislocation and Market Response
The USDe episode became a focal point in post-crash analysis. Ethena founder Guy Young said at the time that the pricing issue was confined to a single trading venue that relied on its own order book rather than broader liquidity pools.
He added that temporary deposit and withdrawal constraints prevented arbitrage traders from correcting the imbalance in real time.
Subsequently, Binance announced that it compensated affected users for approximately $283 million. The exchange claimed that the problem was caused by a localized malfunction of the oracle, not by a system failure in the USDe mechanism.
Regardless of the compensation, criticism continued to flow regarding the pace and transparency of Binance’s communication during the incident.
Relations to Past Market Failures.
Additionally, Users compared the collapse of Terra/LUNA in 2022, which was accompanied by market stress exacerbated by stablecoin dynamics. Binance has continued to insist that the October pricing issue was an isolated incident, not a systemic breakdown.
The market participants also cited a delay in exchange disclosures during the October sell-off, saying that more explicit communication would have minimized avoidable losses.
Such comparisons have continued to focus on leveraging practice and exchange risk management amid industry discussion.
Market Impact After October 10
The impact of the crypto crash on the 10th of October was not limited to derivatives markets. Bitcoin, which had been above $126,000 at the start of November, had dropped to less than $80,000 by the end of the month.
The decline led to an expanded collapse of the market, removing more than a trillion in cumulative capitalization from the cryptocurrency markets since the dawn of October.
According to analysts, recovery in digital assets has been inconsistent during the sell-off, with trading volumes and risk levels not yet returning to pre-crash levels.
Macro Factors that impact Crypto Markets.
Samer Hasn, an XS.com analyst, asserts that a neutral-to-hawkish Federal Reserve position and ongoing geopolitical tensions in the Middle East have reduced the need to speculate in crypto markets.
These conditions have added pressure to sentiment that was already weakened following the October 10 crypto crash.
Separately, Bitwise Chief Investment Officer Matt Hougan said that gold’s rise above $5,000 an ounce and uncertainty surrounding U.S. crypto legislation are shaping a pivotal period for digital asset markets.
