US SEC Allegedly Investigating Binance Over October 10 Liquidation Event

bitcoinistPublished on 2026-02-09Last updated on 2026-02-09

Abstract

The US SEC is reportedly investigating Binance regarding the October 10, 2025 liquidation event, the largest market crash in crypto history, during which $19 billion in leveraged positions were wiped out. Rumors of the probe resurfaced after a post by market expert Hugo Crypto, though unconfirmed. The crash saw Bitcoin plummet from $122,000 to $104,000, affecting 1.6 million traders. Binance attributed the event to macroeconomic shocks, denied responsibility, and paid $283 million in compensation. Former CEO Changpeng Zhao later addressed claims of technical issues, emphasizing the platform provided $600 million in compensation. The incident has drawn comparisons to the 2010 Flash Crash and continues to fuel scrutiny and accusations within the industry.

Rumors of a possible US Securities and Exchange Commission (SEC) investigation into Binance have resurfaced long‐running questions about the October 10, 2025 liquidation event, the largest market wipeout in crypto history.

October 10 Crash Back In Focus

For context, during the October 10 event, roughly $19 billion in leveraged positions were liquidated, with $3.21 billion erased in a single minute. Around 1.6 million traders were forced out of their positions as Bitcoin plunged from about $122,000 to $104,000.

Speculation around Binance’s role in the crash has intensified following a post on X (previously Twitter) by market expert Hugo Crypto. In his message, he cautioned that he could not independently confirm reports of an SEC probe into Binance, stressing that the claim remains a rumor.

However, he argued that the broader story surrounding the October 10 collapse warrants serious attention regardless of whether a formal investigation is underway.

Since the crash, a series of developments has kept Binance under scrutiny. Shortly after the event in October 2025, the exchange attributed the turmoil to a broader macroeconomic shock and denied responsibility, later paying about $283 million in compensation.

In January 2026, Ark Invest CEO Cathie Wood stated during an appearance on Fox Business that a “Binance software glitch” was responsible for triggering the crash.

Later that month, OKX CEO Star Xu publicly accused Binance of engaging in “irresponsible marketing campaigns,” further escalating tensions between major exchanges.

In early February, Binance reportedly sent cease‐and‐desist letters to X users who were speculating about the exchange’s solvency. Now, fresh rumors suggesting potential SEC involvement have added a new layer of uncertainty, even though no official confirmation has been made.

Binance Denies Responsibility

Regardless of whether the SEC is actively investigating, some former regulators argue that the October 10 crash itself demands a thorough review.

Salman Banaei, a former official at the Commodity Futures Trading Commission (CFTC), has compared the incident to the 2010 Flash Crash in traditional markets, saying it merits a similarly rigorous investigation.

The exchange’s leadership, however, continues to reject claims that the exchange caused the market collapse. At the end of January, former CEO Changpeng Zhao publicly dismissed accusations that Binance was responsible for the October 2025 crash.

Zhao addressed claims that technical issues and pricing discrepancies on Binance triggered the record‐breaking liquidations. He emphasized that, following the crash, the platform offered approximately $600 million in compensation to affected users and businesses.

The daily chart shows BNB’s price consolidating just above $640. Source: BNBUSDT on TradingView.com

Featured image from OpenArt, chart from TradingView.com

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3.9k Total ViewsPublished 2025.03.26Updated 2025.03.26

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