- Binance denies insolvency claims after forged legal document spreads across crypto markets
- Viral cease and desist sparks renewed scrutiny over Binance stability
- Social media rumors reignite withdrawal fears despite Binance rejection of allegations
Market concern intensified this week after Binance rejected a cease-and-desist document linked to insolvency claims, which circulated on X alongside posts questioning the exchange’s financial position. As the discussion spread, traders and analysts revisited earlier concerns surrounding centralized exchange stability.
The episode began when an X user known as Lewsiphur accused Binance of being insolvent, suggesting the situation could trigger severe disruption across digital asset markets. Shortly afterward, the user shared a cease-and-desist document threatening legal action if the post remained online, which subsequently circulated widely and amplified anxiety across the crypto community.
Binance Rejects the Authenticity of Legal Document
Binance addressed the situation through its official customer support account on X, stating that the circulating document did not originate from the exchange and describing it as a forgery intended to mislead users and distort public perception, while urging traders to remain alert to fabricated documents and false narratives.
Also Read: Bitcoin Slumps Below $72,000 as Altcoins Bleed and Volatility Grips Crypto
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
Despite the stated deadline mentioned in the document, the original post stayed online at publication time. Additionally, Lewsiphur announced plans for a livestream aimed at presenting evidence supporting the insolvency claim. The announcement also included the promotion of an online casino. Hence, skepticism increased regarding the seriousness and credibility of the allegations.
Historical Market Stress Shapes Current Sentiment
Beyond the disputed document, rumors questioning Binance’s stability have circulated for several weeks. Many discussions reference the October 2025 market crash, which shook confidence across exchanges. During that period, users reported frozen accounts and failed orders. Traders also experienced temporary withdrawal and deposit delays during extreme volatility.
Market participants largely attributed those disruptions to macroeconomic pressure, heavy leverage, and thin liquidity. Binance has repeatedly denied any role in causing the crash. According to former chief executive Changpeng Zhao, accusations linking Binance to the event lack factual grounding. He previously described such claims as unrealistic during public discussions.
Withdrawal Campaign Highlights Lingering Distrust
Ongoing skepticism within the crypto community has influenced trading behavior. As a result, some users encouraged withdrawals from centralized platforms into self-custody wallets. Binance co-founder Yi He acknowledged the existence of a community-driven withdrawal campaign. She stated that asset balances held in Binance addresses increased after the campaign began.
Moreover, Yi He described regular withdrawals as a practical stress test for trading platforms. Her remarks aimed to counter narratives suggesting liquidity strain at the exchange. However, the campaign reflects persistent distrust affecting large centralized exchanges during volatile market cycles.
The incident demonstrates how quickly unverified claims can shape sentiment. Besides fueling fear, viral narratives can intensify volatility during uncertain conditions. The situation also highlights the ongoing challenge exchanges face in maintaining confidence amid rapid information spread.
Also Read: U.S. Treasury Secretary Scott Bessent Confirms No Plans to Buy More Bitcoin
