Binance says 10/10 crypto crash wasn't its fault. Its former CFO says otherwise

For months, Binance has argued that the October 10 incident, the record liquidation crash that wiped out roughly $20 billion in leveraged crypto positions, was the result of a market-wide failure rather than the exchange's own calculated strategy.

But Wei Zhou, Binance's first chief financial officer, who worked at the exchange from 2018 to 2021, is still pointing at the exchange, saying the market continues to suffer from a "lack of transparency from Binance" and that traders don't fully trust its systems won't crash again during another weekend shock.

Zhou made the comments in a July 2 post on X explaining why he thinks crypto remains in a bear market, arguing that "ALL the whales got nuked going into Uptober on Oct 10/11." He explained:

What Binance says

Binance has spent months trying to distance itself from the crash, arguing that the Oct. 10 wipeout was a market-wide liquidation event, not a failure of its own systems.

Richard Teng, Binance's co-CEO, who took over the exchange after founder Changpeng Zhao pleaded guilty to violating U.S. anti-money-laundering law and later served four months in prison, said in February that the nearly $20 billion wipeout was "a crypto event, not a Binance event," per Bloomberg.

At CoinDesk's Consensus Hong Kong, Teng also argued that every major crypto venue saw liquidations that day, not only Binance.

• He emphasized that U.S. equities also lost about $1.5 trillion in market value, U.S. equity liquidations reached about $150 billion, and crypto liquidations were around $19 billion across exchanges.

What went wrong

But the technical record is harder for Binance to package as cleanly. Binance, the world's largest crypto exchange by trading volume and a venue that averages billions of dollars in daily trading volume, acknowledged two platform-specific incidents during the Oct. 10 crash, while insisting that neither caused the broader market move.

• The first was a slowdown in its internal asset-transfer system between 21:18 and 21:51 UTC, which affected transfers between spot, Earn and futures accounts.
• Binance said the issue came from a database performance regression under surge traffic and that some users temporarily saw zero balances because of backend timeouts.

Binance's report also said the asset-transfer subsystem "slowed for about 33 minutes" after a high-frequency read path in the asset database slowed down under sudden load.

• It also said traffic was "5-10x normal," database connections became "saturated" and a cloud-service update had removed a built-in caching mechanism.

The second incident involved temporary index deviations for USDe, WBETH and BNSOL between 21:36 and 22:15 UTC.

• Binance said thin liquidity and delayed cross-venue rebalancing caused local price moves to weigh too heavily in index calculations.
• It also said about 75% of the day's liquidations had already happened before those index deviations, which is central to its argument that the macro shock came first.

And that is what made the Binance debate so explosive. USDe, Ethena's synthetic dollar and the third-largest stablecoin at the time, is designed to trade around $1. But during the crash, it fell to $0.65 on Binance, causing a cascade effect across the industry.

Binance later reportedly changed how it prices wrapped assets, moving toward conversion-ratio pricing instead of relying on distressed spot trades during market stress.

• Binance also paid users. Decrypt reported that the exchange reimbursed about $283 million to users affected by the USDe, BNSOL and wBETH depegs, covering users whose positions were liquidated while holding those assets as collateral across margin, futures and loan products.