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Binance has dismissed viral social media claims that the exchange is insolvent and facing bankruptcy, calling a widely circulated cease-and-desist letter a “forgery with a very active imagination.”
The rumors, which began spreading on X on Tuesday, triggered withdrawal activity and comparisons to the 2022 FTX collapse, though on-chain data shows no evidence of net asset declines at the world’s largest cryptocurrency exchange.
The initial allegation came from an X user known as Lewsiphur, who asserted Binance was insolvent and warned that the effects could be catastrophic, even more so than the 2022 collapse of FTX, a major bankruptcy that roiled crypto markets.
The purported legal notice quickly spread online, amplifying anxiety among traders and holders. Amid the uproar, some users reportedly began withdrawing funds from Binance accounts, further stoking uncertainty.
Data from on-chain analytics, however, does not show a net decline in Binance asset holdings tied to those withdrawals, according to on-platform sources.
Binance moved swiftly to counter the rumours, publicly dismissing the circulated cease-and-desist letter as a fabrication.
In a reply to the viral post on X, the official Binance customer support account wrote:
“This letter is not from Binance. It’s a forgery with a very active imagination. Please stay alert to fake documents and misleading information.”
This response was later confirmed in coverage by independent crypto news outlets, which noted that Binance did not send any legal warning or demand for content removal tied to insolvency accusations.
Industry observers say false legal documents are a known vector for spreading misinformation in crypto communities, where bad actors attempt to leverage fabricated proof to give weight to otherwise baseless claims.
Despite Binance’s denial, the original social media posts remain live, and some community members have called for livestreams and further evidence.
Amid the flurry of activity, Binance co-founder Yi He addressed the situation on X, framing the increased withdrawals as a kind of stress test rather than a symptom of collapse, and urging users to take precautions when moving funds:
“Some friends in the community have initiated a withdrawal campaign. I believe that regularly initiating withdrawals from all trading platforms is a very effective stress test… as there is no way to recover funds on the blockchain.”
Yi He, co-founder of Binance, said to tackle the false bankruptcy claims.
On-chain data regarding Binance’s asset holdings does not suggest a contraction consistent with insolvency, according to industry trackers cited in media reports.
Although analysts caution that blockchain snapshots offer only one dimension of a complex exchange’s financial health.
The rumours come against a backdrop of persistent scepticism and regulatory scrutiny in the crypto sector.
They have faced multiple legal challenges over the years, including actions by the U.S. Securities and Exchange Commission alleging unregistered operations, and other jurisdictions demanding greater oversight.
The October 2025 market crash that saw reports of frozen accounts and failed trades has also fed narratives questioning exchange stability, despite official denials from their executives at the time.
Experts note that misinformation can spread rapidly in financial communities, especially where incentives for volatility are high, and verification channels are fragmented.
While Binance’s rebuttals aim to reassure investors and users, the episode shows how quickly trust, a cornerstone of financial markets, can be tested in crypto ecosystems.
Regulators, institutional participants, and retail investors alike are watching to see whether such episodes will prompt stronger verification mechanisms or community-led fact-checking standards.
