OKX CEO Star Xu attributes the $19 billion October 10 market collapse to Binance’s high-yield promotion of Ethena’s synthetic dollar, USDe, which he says created a fragile leverage loop that shattered. He alleged that Binance’s user-acquisition campaign for USDe encouraged excessive leverage and a systemic fragility that collapsed under market stress. Xu claimed that Binance offered a 12% annual yield on USDe, allowing users to collateralize the asset on terms comparable to USDT and USDC. This campaign enabled users to leverage USDe as collateral with the same treatment as USDT and USDC without effective limits, Xu wrote.
However, leading industry stakeholders have forcefully rejected Xu’s narrative, citing transaction data that contradicts his timeline. Haseeb Qureshi, managing partner at Dragonfly, argued that Bitcoin’s price bottomed a full 30 minutes before the USDe deviated from its peg on Binance. ‘USDe clearly can’t have caused the liquidation cascade,’ Qureshi stated, calling the accusations a misplacement of cause and effect. Ethena Labs founder Guy Young disputed Xu’s claims, citing order-book data that proves that the USDe’s price discrepancy occurred only after the broader market had already crashed.
Binance, meanwhile, maintained that the issue stemmed from a ‘liquidity vacuum’ rather than its product offerings. The exchange released data indicating that Bitcoin liquidity was ‘zero or near zero’ across most major venues during the crash. Binance also denied any systemic manipulation, attributing the chaotic price action to market makers pulling inventory in response to extreme volatility and API latency. Nonetheless, this conflict highlights the intensifying blame game between top crypto exchanges as they face continued scrutiny over the structural fragility revealed during the October 10 incident.
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