Binance Faces Backlash as Crypto Twitter Criticizes Its Role in Market Volatility

Changpeng Zhao, co-founder of Binance, has dismissed allegations that the exchange played a significant role in the October 2025 crypto market crash. He described the claims as 'far-fetched' during a live Q&A session on Binance's platform. Zhao emphasized that regulatory oversight supports the platform's compliance.

The October 10 crash led to over $19 billion in liquidations, marking the largest single-day loss in crypto history. Critics argue that Binance's technical issues and price discrepancies contributed to the turmoil. Binance later offered around $600 million in compensation to affected users and businesses.

Zhao stepped down as CEO in 2023 and is currently serving as a shareholder and user of Binance. He has previously faced legal consequences for anti-money laundering violations and was pardoned by President Donald Trump in October 2025.

Why Did This Happen?

Market participants, including analysts like Don Wilson of DRW, have raised concerns about the neutrality of some crypto exchanges during the October crash. Zhao maintained that Binance's role in the event was not significant and that the crash was influenced by broader market conditions.

The depeg of Ethena's USDe stablecoin on Binance was a flashpoint during the crisis. This event was attributed to an internal oracle issue on the platform, according to Ethena's founder Guy Young.

How Did Markets React?

The October 2025 crash had long-lasting effects on the crypto market, with market capitalizations of altcoins dropping by up to 54%. Users reported technical glitches and unfair liquidations, intensifying frustrations.

Binance has addressed these concerns by compensating users affected by the crash. The company has also emphasized its compliance measures and regulatory oversight, particularly in Abu Dhabi and the U.S.

What Are Analysts Watching Next?

Binance's recent activities include a potential deal with the U.S. Justice Department, which could eliminate the requirement for an external compliance monitor. This would mark a significant step in its regulatory strategy.

In addition to resolving the October 2025 incident, Binance plans to expand in South Korea after repaying GoFi users. This move is expected to enhance its position against local exchanges like Upbit and Bithumb.

Zhao has also dismissed criticisms of his investment advice, arguing that market movements are influenced by liquidity and narratives, not individual actions. He suggested that some social media posts were part of coordinated FUD campaigns.

Binance's response to the recent criticism includes claims that no single entity can manipulate the market to such an extent. Zhao emphasized that Binance does not engage in proprietary trading to profit from crypto trading and that the platform has a clear compensation policy in place.

The company's recent expansion plans include upgrading Gopax's infrastructure and focusing on stablecoins and institutional crypto services. These strategies are expected to align with South Korea's regulatory environment.

Binance has also faced accusations of insider manipulation, with some tokens showing artificial price pumps. CZ acknowledged the presence of malicious accounts spreading FUD but stated that most users acted rationally.

The current wave of criticism may create short-term pressure but is likely to enhance Binance's brand awareness in the long term. Zhao remains confident in the platform's ability to overcome these challenges and continue its growth trajectory.

Market participants remain divided over the platform's role in the recent turmoil. While some view the criticism as unfounded, others see it as a legitimate response to systemic issues in the crypto market.

Binance's approach to addressing user concerns includes transparency in its compensation policies and continued regulatory cooperation. These efforts are expected to shape its future operations and market position.