I watched this situation unfold in real time, following each development as it emerged. With every update, the weight of the event became clearer. Last October, the crypto market was rocked suddenly and violently. Close to nineteen billion dollars in leveraged positions were wiped out almost instantly. Fear spread at lightning speed. Asset prices plunged, and online discussions quickly turned into a storm of blame. One company was repeatedly singled out: Binance. For many traders, it became the simplest explanation for what was widely described as the largest liquidation event in crypto history. But the more I looked into it, the less convincing that narrative became.
Changpeng Zhao, widely known as CZ, responded quickly and decisively. Based on what I found, he argued that claims of Binance deliberately setting off a market-wide collapse did not hold up logically. It struck me as a familiar pattern after major losses. When traders suffer heavy damage, they often look for one clear party to fault. CZ even pointed out that some users believed Binance should compensate them because they thought the exchange directly caused their losses. In that moment, it seemed emotion was driving the conversation far more than verified facts.
One aspect of CZ’s response stood out to me. He was not speaking as Binance’s CEO. Instead, he spoke as an investor and platform user. That distinction matters. He stepped down from running Binance in 2023 following legal issues in the United States, and his role since then has changed significantly. Even so, his voice still carries influence due to his long-standing presence in the crypto space. When CZ comments, the industry pays attention—sometimes excessively.
Another factor intensified the October panic. Ethena’s USDe briefly lost its dollar peg on Binance. Traders noticed almost immediately as the price dropped sharply and, for a short period, traded well below one dollar. On the surface, it appeared to be a stablecoin failure. A closer look revealed something else. USDe itself was not collapsing. The issue stemmed from a pricing anomaly linked to how Binance managed internal data feeds for that specific trading pair.
Ethena’s founder later clarified that the problem was limited to a single exchange. On other platforms, USDe maintained its peg. The situation escalated because deposits and withdrawals were temporarily paused, preventing arbitrage traders from correcting the price discrepancy. That gap was quickly filled with fear instead. To me, it felt like a textbook example of how technical constraints and panic can combine into a market shock. To Binance’s credit, the exchange later reimbursed affected users with hundreds of millions of dollars. That move acknowledged the consequences, even while denying responsibility for the broader crash.
As the dust settled, the scale of the damage became clearer. Bitcoin had been trading close to record levels earlier that month before dropping sharply and pulling the rest of the market down with it. More than one trillion dollars in total market value disappeared. It reinforced a familiar lesson: when leverage dominates, market confidence becomes extremely fragile. In those environments, even small triggers can set off cascading failures. Too often, coincidence gets mistaken for causation.
My research also highlighted pressures that had nothing to do with any single exchange. Global conditions were already tense. Signals from the US central bank suggested continued tightening. Geopolitical conflicts added further strain. Investors were shifting capital into traditional safe havens like gold, which reached new highs. Meanwhile, ongoing regulatory uncertainty around crypto in the United States created persistent unease. All of these factors were in play long before October.
When viewed as a whole, placing the blame on one platform feels overly simplistic. Crypto markets are fast-moving, and sentiment can turn instantly. High leverage transforms fear into disaster within minutes. CZ’s response did not read as deflection to me. Instead, it felt like a broader reminder: markets rarely collapse because of a single action or actor. They fail when multiple risks collide at the same time.
This episode also highlighted how quickly stories take shape during chaos. Narratives spread faster than understanding, and blame often outruns analysis. My takeaway is straightforward. Anyone trying to understand crypto must look beyond headlines and examine the underlying mechanics. This was never just about Binance or CZ. It was about fragile confidence and how easily careful reasoning gets replaced when markets fall apart.
