Cryptocurrency behemoth Binance (CRYPTO: BNB) on Wednesday denied issuing any legal threats against an individual who alleged the cryptocurrency exchange was insolvent and played a part in the October crypto flash crash.
The Allegations Against Binance
An X user, going by the pseudonym Lewsiphur, said they received a cease-and-desist notice from Binance, a day after accusing the world’s largest cryptocurrency exchange of insolvency and being “solely responsible” for the Oct. 10 event that triggered the cryptocurrency market’s largest-ever liquidation.
“I really want to expose everything I was told from credible resources but I can’t risk a legal battle,” Lewsiphur said.
Binance denied sending the notice, calling the letter a “forgery with a very active imagination.”
X users added a community note to Lewsiphur’s post, stating, “The author of the post fabricated a cease and desist letter to promote a false narrative about Binance and advance his own casino affiliation.”
Leonidas, another widely followed X personality, said they have “independently verified a real instance” of Binance threatening to sue a user for speaking up about the October event, known in crypto circles as the “10/10” event.
“Ignore the fake screenshots that people are shitposting for engagement,” Leonidas said. “This situation is very real.”
One user tagged Elon Musk, referencing his 2023 promise to fund legal bills for X users unfairly treated by employers. The user alleged that Binance and its founder Changpeng “CZ” Zhao are “trying to silence” and sue independent analysts.
Binance didn’t immediately return Benzinga’s request for comment on the matter.
What Does Data Tell Us?
Blockchain analytics firm CryptoQuant said Binance displays “no signs of stress.”
“Reserves hold near 659,000 BTC, netflows remain normal, and reserve movement sits at just 0.6%, nowhere close to the -12% panic withdrawals seen post-FTX,” CryptoQuant said.
Moreover, the exchange saw a net inflow of $586.50 million on Feb. 4 and $1.30 billion over the prior week, according to data from DeFiLlama.
Meanwhile, CZ took to X to dismiss the speculations as FUD.
Who Led To October Flash Crash?
Binance attributed October’s flash crash to macroeconomic pressures, excessive leverage, and Ethereum (CRYPTO: ETH) network congestion in a report published last week. Critics, however, point to a malfunction in Binance’s own trading infrastructure.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
Photo Courtesy: Mehaniq on Shutterstock.com
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