OKX CEO Star Xu has publicly accused Binance of being central to the October 10 crypto market crash that wiped out tens of billions of dollars, with damage many described as exceeding the FTX fallout in 2022. In a detailed statement on X, Xu said the sell-off was not a complex or mysterious market event, but the direct result of “irresponsible marketing campaigns” that have fundamentally altered crypto market microstructure. On that day, Bitcoin experienced a 16.5% flash crash, falling from $121,000 to $101,000. Xu attributed the trigger to Binance’s temporary user-acquisition campaign offering up to 12% APY on USDe, while allowing the asset to be used as collateral on par with USDT and USDC, with insufficient limits.
Xu explained that USDe is not a conventional stablecoin but a tokenized hedge fund product issued by Ethena, where user capital is deployed into index arbitrage and algorithmic trading strategies before tokenization. He argued that this design embeds hedge-fund-level risk into an asset presented to users as functionally equivalent to low-risk stablecoins. Notably, users were encouraged to convert USDT and USDC into USDe for yield. The leverage loop saw traders using USDe as collateral to borrow more USDT, convert back into USDe, and repeat, driving APYs to 24%, 36%, and even over 70%, which many users perceived as low risk because they were offered on a major exchange like Binance; a surge in market volatility would cause USDe to depeg rapidly, triggering massive liquidations.
Xu urged industry leaders, including Binance, to prioritize transparency, stronger risk controls, and responsible innovation to restore long-term trust. Binance co-founder and former CEO Changpeng Zhao (CZ) has pushed back on Xu’s narrative, saying the October 10 sell-off was due to tariff-related macro news rather than system failures or deliberate actions. In a Binance Square AMA on January 31, 2026, CZ argued that given Bitcoin’s liquidity, it would be extremely difficult for any single entity to influence prices simply by dumping, and he noted that Binance’s post-incident review revealed technical irregularities but denied they caused the crash. Dragonfly partner Haseeb also countered Xu’s accusations, pointing to the timing of USDe’s depegging and its isolation to the Binance exchange as undermining the claims.
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