Binance came very close to a full bank run after rumors of insufficient reserves circulated on Feb 2, 2026. It had temporarily paused withdrawals on the same day, which gave strong support to the rumors of insufficient reserves, a dire situation faced by FTX mere days before its bankruptcy.
The Market Crash of October 10, 2025
On October 10, 2025, the crypto market saw a massive crash, led by Bitcoin, which alone fell from $126,000 to $107,000 in a single day. The crash was caused by a massive liquidation in crypto and stock markets. In the crypto markets, this liquidation was reportedly worth $19 billion.
The liquidation was caused by a rumor of a 100% tariff on Chinese goods by US President Donald Trump. The same was stated by Binance co-founder and Chairperson Changpeng Zhao, as reported by known blockchain journalist Wu.
However, market participants allege that it was Binance that caused the October 10 market crash. OKX crypto exchange CEO Star Xu alleged that Binance’s offering of high-risk products like Ethena’s USDe attracted investors with its 20% yield, with some users even reportedly reinvested the same multiple times through LP staking and yielded upto 40% in staking.
With a slight de-peg in Ethena’s USDe, all of its investors scrambled to redeem their tokens. Typically, this is a normal move because a stablecoin offers only one thing, i.e., stability, and it has occurred in the past for USDT, USDC, and many algorithmic stablecoins.
These liquidations then reportedly drove market users from selling their investments, which then spiralled into a full-blown market sell-off. Some allege that there were large coordinated short positions in the market (some possibly even from Binance’s internal team), which further accelerated the crash.
How Did it Risk Binance’s Own Reserves?
Binance reportedly holds at least $1 billion in free cash flow stablecoins across different tokens, which are not user-deposited and are fully owned by the exchange.
Amid withdrawals post the October 10 crash and subsequent market sell-off, it was alleged that the exchange might not have sufficient reserves to cover its user deposits.
Binance also sent a cease-and-desist notice to the X user Lewsiphur regarding his claims about the exchange’s insolvency.
Fast forward to February 4 and 5, 2026, when Binance temporarily paused withdrawals, and concerns about its insolvency grew even higher.
Is Binance Shutting Down?
No, based on the on-chain reserves page and Binance’s purchases (verified by us), shows that the exchange might not be at risk of a bank run.
Binance reportedly holds around $140 billion in on-chain reserves, meaning all funds held in user accounts are available for anyone to view. You can also view this at Binance’s transparency page.
Further, Binance and CZ recently tweeted that the exchange will buy $1 billion worth of Bitcoin with its own funds, mostly stablecoins, to further stabilize its reserves in tranches of $100 million.
Disclaimer: BFM Times acts as a source of information for knowledge purposes and does not claim to be a financial advisor. Kindly consult your financial advisor before investing.
