CZ Denies Binance Role in $19 Billion October Crypto Crash

TLDR

• Former Binance CEO Changpeng Zhao denies that Binance caused the October 10 crypto market crash that liquidated $19 billion in positions
• During the crash, Ethena’s USDe stablecoin briefly dropped from $1 to $0.65 on Binance due to an internal oracle issue
• Binance compensated affected users approximately $283 million after the incident
• Bitcoin fell from above $126,000 in early October to below $80,000 in November, erasing over $1 trillion from the crypto market
• Zhao currently runs YZi Labs investment company managing $10 billion in assets after stepping down as Binance CEO in 2023

Former Binance CEO Changpeng Zhao has rejected claims that the cryptocurrency exchange caused the largest liquidation event in crypto history. The October 10 crash wiped out roughly $19 billion in positions across global markets.

Zhao addressed the accusations during a Q&A session on Binance’s social media channels. He called the allegations “far-fetched” and denied Binance played a major role in the crash.

Zhao clarified he was speaking as a Binance shareholder and user, not as a company representative. He stepped down as CEO in November 2023 after pleading guilty to federal charges related to anti-money laundering law violations.

The former CEO served a prison sentence but received a pardon from President Donald Trump last October. He now oversees YZi Labs, an independent investment company that evolved from Binance’s venture capital arm.

YZi Labs manages approximately $10 billion in assets. Zhao remains active in the cryptocurrency industry through this investment vehicle.

USDe Stablecoin Dropped to $0.65 During Crash

Binance faced scrutiny during the October 10 crash after Ethena’s USDe stablecoin experienced a sharp depeg on the platform. The stablecoin briefly fell from its $1 peg to about $0.65.

Ethena Labs founder Guy Young later attributed the price dislocation to a platform-specific internal oracle issue. He said the problem was isolated to one trading venue.

These technical problems prevented market makers from closing the arbitrage loop. This made the price gap worse during the crash.

Following the incident, Binance compensated affected users about $283 million. The exchange took responsibility for the technical issues that occurred on its platform.

Market Struggles to Recover After October Selloff

The crypto market has struggled to regain its footing since the October crash. Bitcoin traded above $126,000 in early October before the liquidation event.

The cryptocurrency briefly fell below $80,000 in November. This contributed to a broader market decline across the crypto sector.

More than $1 trillion in total market capitalization was erased from early October levels. The effects of the crash continue to ripple through markets three months later.

Zhao said Binance operates under oversight in Abu Dhabi and the United States. He also highlighted Binance’s proof-of-reserves system and past ability to process more than $15 billion in withdrawals without halting services.

The post CZ Denies Binance Role in $19 Billion October Crypto Crash appeared first on CoinCentral.