TLDR
- Changpeng Zhao, former CEO of Binance, rejected claims that the exchange played a significant role in the October crypto market crash.
- Zhao described the allegations that Binance caused the $19 billion liquidation event as “far-fetched” and unsubstantiated.
- Binance faced scrutiny after a sharp depeg of the Ethena USDe stablecoin, which was attributed to a platform-specific oracle issue.
- The October 10 sell-off led to the liquidation of over $19 billion in positions across the crypto market.
- Binance compensated affected users about $283 million following the price dislocation caused by the USDe stablecoin issue.
Changpeng Zhao, the former CEO of Binance, recently denied allegations that the exchange played a major role in the largest liquidation event in cryptocurrency history. The market crash on October 10 wiped out around $19 billion in positions across the industry, sparking accusations against Binance. Zhao dismissed these claims as “far-fetched,” asserting that Binance was not responsible for the widespread sell-off.
Binance Faces Scrutiny During the Market Crash
On October 10, the crypto market experienced a significant sell-off, wiping out billions in positions. Binance found itself at the center of scrutiny following a sharp depeg of Ethena’s USDe stablecoin on the platform. The stablecoin briefly fell from its $1 peg to $0.65 on Binance, which raised questions about the exchange’s role in the crash.
The price dislocation was attributed to a platform-specific issue involving Binance’s internal oracle system. Ethena Labs’ founder, Guy Young, clarified that the dislocation was isolated to Binance. He explained that the issue was related to the platform referencing an oracle index from its own order book, which caused the price discrepancy.
Despite these problems, Binance took responsibility for the situation and compensated affected users. The exchange paid out approximately $283 million to users impacted by the price dislocation. Zhao later explained that Binance worked to address the problem and offered compensation as a corrective measure.
Crypto Market Crash Leads to Massive Liquidations
The sell-off on October 10 resulted in the largest liquidation event in crypto history. Over $19 billion in positions were liquidated across the market, with Bitcoin seeing its price drop below $80,000. The decline contributed to a broader downturn in the cryptocurrency market, which saw over $1 trillion in market capitalization erased.
While Binance was under scrutiny, Zhao firmly rejected any claims that the exchange’s actions directly caused the market crash. He stated that such accusations were “far-fetched” and denied any substantial contribution to the broader market collapse. Zhao also emphasized that the liquidations were part of a larger market event, with many other factors at play.
Although Binance was not solely responsible for the crash, its handling of the USDe issue led to questions about the exchange’s stability. Zhao’s comments suggest that the crash’s impact was more widespread and involved multiple exchanges, not just Binance. The incident highlighted the ongoing volatility and risks within the cryptocurrency market.
As of now, the market has struggled to recover from the October crash, with Bitcoin’s price still below its October highs. While Binance faces scrutiny, Zhao’s rejection of the claims puts the focus back on broader market forces and the volatility of crypto assets.
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