Binance has denied issuing a cease-and-desist notice that circulated widely on social media, claiming the exchange is insolvent. The Company said the alleged legal letter is fake and urged users to remain cautious of misleading documents shared online.
Viral Letter Triggers Insolvency Claims
The controversy began when an X user known as Lewsiphur posted claims that Binance was insolvent. The post warned that the situation could exceed the fallout seen during the FTX collapse.
I got a cease and desist from Binance.
I really want to expose everything I was told from credible resources but I can’t risk a legal battle. https://t.co/i4eZ10IOGH pic.twitter.com/BPEjLRq2xV
— Lew (@Lewsiphur) February 4, 2026
Soon after, the user shared an image of a purported cease-and-desist notice. The document claimed Binance would pursue legal action unless the insolvency post was deleted by 5 p.m. ET. The image spread rapidly across crypto-focused accounts.
The post gained traction during a period of existing market anxiety. As a result, the alleged legal threat drew immediate attention from traders and commentators. Despite the document’s circulation, no verified legal filing accompanied the claim.
Binance Denies Issuing Legal Threats
Binance responded through its official customer support account on social media. In its statement, the exchange said the circulating cease-and-desist notice was not authentic. The Company described the document as a forgery.
The support account warned users to remain alert to fake messages and fabricated screenshots. Binance also clarified that it had not requested the removal of posts discussing insolvency. The exchange said it had not issued legal warnings tied to bankruptcy rumors.
Screenshots of the support response were shared widely across platforms. In those posts, Binance reiterated that it had no connection to the viral document. The exchange maintained that the letter did not originate from its legal department.
Ongoing Rumors Linked to October 2025 Volatility
Rumors surrounding Binance’s financial stability have circulated for weeks. Much of the discussion traces back to the October 2025 market crash, which saw extreme volatility across digital assets.
Crypto markets experienced sharp volatility during October 2025, fueling renewed scrutiny of major exchanges. [Nasdaq]
During that period, users reported frozen accounts and failed trade orders. Others described deposit and withdrawal disruptions amid rapid price movements. The volatility was linked to macroeconomic pressures, high leverage, and thin liquidity conditions.
Binance denied playing a role in triggering the market crash. Former CEO Changpeng Zhao dismissed allegations as “far-fetched” in earlier comments shared online. The Company maintained that broader market forces drove the disruptions.
Platform Incidents and User Recovery Program
In October, Binance acknowledged a slowdown in an internal asset-transfer system. Some accounts briefly displayed zero balances during that technical issue. The Company said the display errors were temporary and resolved.
Binance also reported short-lived price index deviations for assets including USDe and WBETH. The exchange attributed those anomalies to extreme market conditions. It stated that the disruptions did not reflect insolvency.
Following the turbulence, Binance said it would allocate $400 million for a user recovery and support program. The exchange clarified that the payments were meant to assist users. It stated that the program did not amount to an admission of liability.
Withdrawal Campaigns and Reserve Assertions
As insolvency rumors intensified, some community members encouraged withdrawals into self-custody wallets. These campaigns were framed by participants as precautionary measures during market stress.
Binance co-founder Yi He addressed the withdrawal activity in public comments. She stated that increased withdrawals can function as routine stress tests for trading platforms. According to her remarks, on-chain data showed asset balances had increased despite the campaigns.
Binance co-founder Yi He [Binance]
The exchange continued to assert that it remains financially stable. Binance said reserves and platform assets remain intact. However, the Company did not announce additional legal action regarding the forged letter.
Livestream Plans and Casino Promotion
The user who shared the alleged legal notice later announced plans for a livestream. The event was described as an opportunity to present supporting evidence for the insolvency claims. At the same time, the user promoted an online casino.
Despite Binance’s denial, the original posts remain accessible online. The situation illustrates how rapidly unverified documents can circulate during periods of market uncertainty. Screenshots and reposts amplified the reach of the alleged letter.
Former Binance CEO Changpeng Zhao previously dismissed insolvency allegations as “far-fetched.” [Bloomberg]
Binance executives, including Changpeng Zhao, have rejected suggestions that they contacted critics or threatened legal action. Public statements described the circulating screenshots as fabricated and misleading. The exchange reiterated that it had not hired lawyers to pursue critics over insolvency discussions.
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Misinformation and Market Reaction
The spread of the forged cease-and-desist letter coincided with broader skepticism toward centralized exchanges. Social media sharing accelerated the narrative within hours. Traders debated the authenticity of the document before Binance issued its denial.
Although Binance labeled the notice fake, some users continued discussing insolvency concerns. Withdrawal campaigns and online commentary contributed to renewed fear within segments of the crypto community. Even so, Binance maintained that its asset base remained stable.
The exchange has not provided further comment beyond its public denial. For now, the forged letter remains online, and the related claims continue circulating among certain accounts. Binance’s position remains unchanged: the cease-and-desist notice is fake, and insolvency allegations are unfounded.
FAQs
- Did Binance issue a cease-and-desist letter over insolvency claims?
No. Binance publicly stated that the circulating cease-and-desist letter is fake. The exchange confirmed it did not issue any legal threats related to insolvency rumors.
- Is Binance insolvent?
Binance has denied all insolvency allegations. The company maintains that its reserves and asset base remain intact and that it is operating normally.
- Why are there rumors about Binance’s bankruptcy?
Rumors gained traction after social media posts claimed Binance was insolvent. The discussion intensified following platform disruptions during the October 2025 market volatility.
- What happened during the October 2025 market crash?
During the October 2025 volatility, some Binance users reported frozen accounts, failed orders, and temporary balance display issues. Binance attributed the disruptions to extreme market conditions and technical slowdowns, not insolvency.
- Did Binance threaten users with legal action?
No verified evidence shows Binance threatened users over insolvency discussions. The company stated that screenshots of alleged legal threats were fabricated.
- Has Binance responded officially to the fake document?
Yes. Binance’s official customer support account confirmed that the circulating legal notice is a forgery and warned users about misinformation.
- Are users withdrawing funds from Binance?
Some users initiated withdrawals into self-custody wallets amid the rumors. However, Binance stated that overall asset balances on the platform have increased despite withdrawal campaigns.
- What did Changpeng Zhao say about the insolvency rumors?
Former CEO Changpeng Zhao dismissed the insolvency allegations as “far-fetched” and denied any involvement in legal threats against critics.
