CZ tackles binance rumors as BitMEX accusations resurface and COVID crash trades scrutinized

Industry debate has intensified as binance rumors resurface over BitMEX trading, the March 2020 covid market crash, and the exchange’s emergency fund moves.

CZ rejects BitMEX profit allegations

Changpeng Zhao, the former chief executive of Binance, has once again moved to defend the exchange, denying claims it secretly traded on BitMEX and profited from client activity during the COVID panic. The latest allegations center on supposed gains of 60,000 BTC made during the March 2020 market collapse.

The controversy reignited after a user on X alleged that Binance was the most profitable entity on BitMEX during the March 12, 2020 crash. According to this trader, the exchange allegedly earned over $240 million by hedging customer positions, posting what they described as the largest withdrawal and highest PnL ever seen on the derivatives platform.

Zhao dismissed the story outright, responding on X that it was “Fake news. They are just making things up randomly now. Not sure what their goal is. I feel bad for the people believing this without seeing any proof.” His comment underscored how quickly unverified claims can spread across social media.

Binance says it never traded on BitMEX

Addressing the accusations in more detail, Zhao insisted that the trading platform has never traded on BitMEX. Moreover, he referenced BitMEX co-founder Arthur Hayes, saying that his friend would certainly know if such outsized profits and withdrawals had occurred on the exchange.

He further argued that the BitMEX withdrawal process, which handles withdrawals only once per day, made the alleged movement of 60,000 BTC implausible. That said, Zhao did not share internal Binance records, instead leaning on operational logic and public process details to rebut the claim.

Responding to another comment under his post, Zhao suggested that the accuser might be spreading the rumor to draw “not-so-sophisticated” users to their own platform. However, he did not name the entity or provide specific evidence about the alleged ulterior motives.

The March 2020 COVID crash context

The disputed claims tie back to one of the most violent selloffs in bitcoin‘s history. On March 12, 2020, as pandemic fears intensified, bitcoin plunged from about $8,000 to nearly $3,800 within roughly half a day. The sudden move triggered a liquidity crisis across crypto exchanges, as buy orders failed to absorb the overwhelming selling pressure.

BitMEX, then considered one of the most active crypto derivatives venues, saw approximately $750 million in bitcoin positions liquidated within minutes. Moreover, cascading liquidations and system strain prompted long-running debates about how leverage and risk engines amplified the COVID crash.

Traditional markets also experienced historic turmoil at the same time. On the stock market front, the Dow Jones Industrial Average fell more than 2,000 points in intraday trading. The S&P 500 dropped 7.6%, oil prices slipped by 22%, and yields on 10-year and 30-year US Treasury bonds fell below 0.40% and 1.02%, respectively.

Regulatory pressure on BitMEX and Arthur Hayes

Regulatory fallout from that era soon followed. About two months after the crash, the US Department of Justice moved against BitMEX leadership. Ultimately, the Southern District of New York sentenced Arthur Hayes to six months of home detention for violating the Bank Secrecy Act.

The court found Hayes guilty of failing to implement and maintain proper anti-money laundering compliance procedures at BitMEX. However, prosecutors argued that because the platform lacked robust know-your-customer controls at the time, the full extent of any misconduct could remain unknowable.

BitMEX later settled with the US Department of the Treasury by paying $100 million. The exchange neither admitted nor denied conducting more than $200 million in suspicious transactions, underscoring how regulatory scrutiny reshaped the derivatives landscape in the years following the pandemic crash.

Binance pushback on wider FUD and selloff claims

Zhao’s latest comments arrive as Binance faces a sustained wave of criticism and speculation, which he repeatedly labels as FUD. Since October last year, the exchange has confronted a series of narratives linking it to price manipulation, aggressive selling, and deteriorating trust in centralized platforms.

At the start of February, Zhao denied claims that Binance dumped bitcoin to trigger a weekend selloff that drove prices below $75,000. Some crypto commentators went so far as to suggest that he had single-handedly canceled the long-theorized “supercycle” in digital assets.

He also rejected separate stories that Binance offloaded $1 billion in bitcoin to push the market down toward $60,000. According to Zhao, those bitcoin transactions discussed on social media came from regular users trading on the exchange, not from the company itself. His comments directly targeted ongoing binance selloff allegations circulating in trading communities.

Defending Binance wallet balances and SAFU strategy

Zhao stressed that internal balances reflect customer behavior rather than corporate trading. “Binance’s wallet balance only changes when users withdraw. Most users keep their balance with Binance and use Binance as a wallet,” he said, arguing that on-chain movements should not be misread as evidence of coordinated dumping.

Moreover, he defended the pace and structure of the exchange’s plan to convert its SAFU reserves from stablecoins into bitcoin within 30 days, a strategy announced at the end of January. He explained that binance safu reserve conversion trades would be executed in multiple tranches rather than via decentralized exchanges.

According to Zhao, market participants should not expect to see these orders routed through a DEX. “You won’t see them buying using a decentralized exchange (DEX). Binance is a CEX with the best liquidity in the world,” he argued, positioning the platform’s deep order books as an advantage when executing large risk-management transactions.

Final tranche of SAFU conversion completed

As reported by Cryptopolitan, the exchange has already completed the final tranche of its emergency reserve strategy. It purchased 4,545 BTC, worth roughly $305 million, for the SAFU pool to conclude its program to convert $1 billion of stablecoin reserves into 15,000 BTC.

This latest step closes a multi-stage accumulation effort that began with the initial announcement of the conversion plan. However, some market watchers continue to link these bitcoin purchases to broader price swings, while Zhao maintains that the binance rumors around coordinated dumping or engineered volatility remain unfounded.

In summary, Zhao’s responses underscore a widening rift between public speculation and verifiable data. As regulatory histories, market crashes, and large fund movements keep colliding, investors are likely to scrutinize both Binance statements and on-chain flows even more closely.