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 injury that many described exceeded the fallout from the FTX collapse in 2022.
Star Xu: Binance USDe Advertising and marketing Accountable For October 10 Crash
And a detailed statement on X, Star Xu stated the October 10 sell-off was not a posh or mysterious market occasion, however the direct results of “irresponsible advertising campaigns,” which now seems to have basically altered the crypto market microstructure. On this explicit day, Bitcoin skilled a 16.5% flash crash, falling from $121,000 to $101,000.
In accordance with Xu, the set off for such a unfavorable occasion was Binance’s short-term 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 isn’t a standard stablecoin however reasonably a “tokenized hedge fund product,” issued by Athena, the place consumer 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 danger into an asset that was offered to customers as functionally equal to low-risk stablecoins.
Notably, customers had been inspired to transform USDT and USDC into USDe for yield. However market danger 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 danger just because they had been supplied on a significant alternate resembling Binance. Nevertheless, a surge in market volatility would trigger the USDe to depeg quickly, triggering large waves of liquidations. Xu stated weak danger administration round belongings 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 danger 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 said 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 tough for any single entity to affect costs just by “dumping.” Binance’s inner post-incident assessment did reveal technical irregularities that occurred on the day, together with short-term 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 alternate, supplied a powerful opposition to such claims.
Featured picture from iStock, chart from Tradingview
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