OKX CEO Star Xu has publicly accused Binance of being central to the October 10 crypto market crash that worn out tens of billions of {dollars}, inflicting harm that many described exceeded the fallout from the FTX collapse in 2022.
Star Xu: Binance USDe Advertising Accountable For October 10 Crash
In a detailed assertion on X, Star Xu stated the October 10 sell-off was not a fancy or mysterious market occasion, however the direct results of “irresponsible advertising and marketing campaigns,” which now seems to have basically altered crypto market microstructure. On this specific day, Bitcoin skilled a 16.5% flash crash, falling from $121,000 to $101,000.
In response to Xu, the set off for such a detrimental occasion was Binance’s non permanent user-acquisition marketing campaign providing as much as 12% APY on USDe, whereas permitting the asset for use as collateral on the identical footing as USDT and USDC, with inadequate limits. Xu defined that USDe will not be a traditional stablecoin however relatively a “tokenized hedge fund product,” issued by Ethena, the place person capital is deployed into index arbitrage and algorithmic buying and selling methods earlier than being tokenized. He argued that this design embeds hedge-fund-level threat into an asset that was offered to customers as functionally equal to low-risk stablecoins.
Notably, customers have been inspired to transform USDT and USDC into USDe for yield. However market threat escalated when merchants began utilizing this USDe as collateral to borrow extra USDT to transform it once more into USDe, and repeat the cycle. This leverage loop resulted in outrageous APYs of 24%, 36%, and even over 70%, which many customers perceived as low threat just because they have been supplied on a significant change resembling Binance. Nonetheless, a surge in market volatility would trigger the USDe to depeg quickly, triggering large waves of liquidations. Xu stated weak threat administration round property like WETH and BNSOL amplified the shock, leading to some tokens briefly buying and selling close to zero.
Whereas insisting he was not assigning blame, Xu emphasised the necessity for trade leaders resembling Binance to prioritize transparency, stronger threat controls, and accountable innovation, warning that short-term yield video games undermine long-term belief.
CZ Fires Again
Notably, Binance co-founder and former CEO Changpeng Zhao (CZ) has pushed again on Xu’s narrative. Talking in a Binance Sq. AMA on January 31, 2026, CZ stated the October 10 sell-off was as a result of tariff-related macroeconomic information, to not Binance system failures or deliberate actions.
CZ argued that given Bitcoin’s sheer market scale and liquidity, it could be extraordinarily troublesome for any single entity to affect costs just by “dumping.” Binance’s inner post-incident evaluate did reveal technical irregularities that occurred on the day, together with non permanent switch or UI show points and deviations in sure indices, however CZ denied that these performed a causal position within the crash.
Managing Associate at Dragonfly, Haseeb, additionally countered Star Xu’s accusations, stating that the timing of the USDe depegging, which occurred after Bitcoin already bottomed, in addition to the isolation of this occasion on the Binance change, supplied a powerful opposition to such claims.
Featured picture from iStock, chart from Tradingview
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