Changpeng Zhao Rejects Claims of Binance Role in $19 Billion Liquidation Event

CZ Addresses Accusations Surrounding Historic Oct. 10 Market Crash

Changpeng “CZ” Zhao, the visionary behind one of the world’s most prominent blockchain ecosystems, recently confronted allegations regarding the massive crypto liquidation event that shook the industry last October. During a digital Q&A session, Zhao dismissed claims that Binance was the primary catalyst for the $19 billion market wipeout, labeling such accusations as unrealistic and “far-fetched.”

The October 10 event stands as one of the most volatile periods in digital asset history, leading to a cascade of forced liquidations that erased billions in value within a single day. Despite the scale of the crash, Zhao maintained that pinning the responsibility on a single platform oversimplifies the complex dynamics of global market movements.

A Perspective from the Sidelines

While Zhao’s influence remains significant, he clarified that his current commentary is offered from the perspective of a major shareholder and active user rather than an executive. After stepping down from his leadership role in late 2023 and navigating a complex legal landscape in the United States, Zhao has shifted his focus toward independent ventures. He currently leads YZi Labs, an investment entity managing a substantial portfolio of approximately $10 billion.

The controversy stems largely from a technical anomaly involving the Ethena (USDE) stablecoin on the exchange during the crash. A localized oracle issue caused the stablecoin to deviate sharply from its dollar peg, dropping to $0.65 on the platform while maintaining stability elsewhere. This discrepancy prevented arbitrageurs from stabilizing the price, leading to localized distress that critics argue amplified the broader market panic.

Market Recovery and Resilience

In the aftermath of the incident, efforts were made to rectify the situation, with over $283 million distributed to affected users. However, the psychological and financial impact on the broader market remains evident. Since the October highs, where Bitcoin reached unprecedented peaks, the total market capitalization of the crypto sector has seen a contraction of over $1 trillion.

As the industry looks toward a potential recovery, Zhao remains optimistic about the long-term trajectory of digital assets. While the October liquidations were a painful reminder of market volatility, the ongoing evolution of trading infrastructure and the resilience of major players suggest a market that is learning from its past challenges.

Frequently Asked Questions

What caused the October 10 crypto market crash?

The October 10 crash resulted from a combination of factors, including a technical oracle issue with Ethena’s USDE stablecoin on Binance that caused it to temporarily depeg to $0.65. This anomaly prevented arbitrage mechanisms from functioning properly, triggering a cascade of forced liquidations totaling $19 billion across the cryptocurrency market. While some critics blamed Binance specifically, CZ argues the crash was due to complex global market dynamics rather than any single platform.

Is Changpeng Zhao still running Binance?

No, Changpeng “CZ” Zhao stepped down from his CEO position at Binance in late 2023 as part of a legal settlement with U.S. authorities. He now participates as a major shareholder and active user of the platform rather than an executive. CZ currently focuses on leading YZi Labs, an investment firm managing approximately $10 billion in assets across various blockchain and technology ventures.

How did Binance compensate users affected by the October crash?

Following the October 10 liquidation event, Binance distributed over $283 million to users who were affected by the market crash and the technical issues related to the USDE stablecoin oracle malfunction. This compensation effort was part of the platform’s attempt to rectify the situation and restore user confidence, though the broader crypto market has still experienced significant contraction since the incident.