Many in the crypto industry remember: On October 10, 2025, crypto prices suddenly plummeted. Bitcoin fell hard from its high of more than $120,000, and since then, the prices of crypto assets have not recovered. Almost four months after the devastating flash crash of October 10, 2024, in which approximately $19.16 billion was liquidated, a public controversy has erupted over the causes of the collapse. At the center of the debate are differing explanations from industry leaders about whether structural problems with individual products or broader market factors were responsible for the crash.
Star Xu, founder and CEO of crypto exchange OKX, attributed the crash to irresponsible marketing campaigns in a series of tweets on Saturday. Xu focused his criticism on USDe, a yield-bearing token from Ethena, which in his view was incorrectly treated like an ordinary stablecoin. “No complexity. No accident. October 10 was caused by irresponsible marketing campaigns by certain companies,” Xu explained, adding that many industry participants believe the damage was more severe than the FTX collapse. Xu argued that users were encouraged to exchange stablecoins for USDe to earn attractive yields, then use USDe as collateral to borrow more stablecoins, convert them back to USDe, and repeat the cycle.
Binance published a detailed report on Saturday in which the exchange attributed the flash crash to a macroeconomic shock that collided with high leverage and vanishing liquidity. The exchange rejected claims that a failure of its trading systems was responsible for the crash. According to Binance, global markets were already under pressure after President Trump imposed new tariffs on China. Bitcoin and Ether had risen sharply in the months before early October, leaving traders heavily positioned and exposed.
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