Delving into the October 10 Crypto Market Crash: An Analysis
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Allegations Against Binance in the Crypto Market Downturn
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Star Xu’s Accusations Against Binance: An Examination
In a significant development, OKX’s CEO, Star Xu, has spotlighted Binance as a pivotal factor in the dramatic crypto market crash on October 10. This market turmoil resulted in the loss of tens of billions of dollars, with impacts reportedly surpassing the infamous FTX collapse of 2022.
Understanding the Core Claims
Xu articulated his views on platform X, attributing the market slump to “irresponsible marketing campaigns” that have seemingly transformed the crypto market’s microstructure. On that day, Bitcoin’s value plummeted by 16.5%, dropping from $121,000 to $101,000. Xu cited Binance’s temporary user-acquisition initiative, which proposed up to 12% APY on USDe, as a catalyst. This campaign allowed users to employ USDe as collateral similarly to USDT and USDC, albeit with inadequate restrictions.
Decoding USDe and Its Market Impact
Xu described USDe not as a typical stablecoin but as a “tokenized hedge fund product” issued by Ethena. Here, user investments are channeled into index arbitrage and algorithmic trading strategies prior to tokenization. This structure, according to Xu, imbues hedge-fund-level risk into an asset marketed as comparable to low-risk stablecoins.
Users were incentivized to transform USDT and USDC into USDe for higher returns. However, market risk surged when traders leveraged USDe as collateral to borrow more USDT, converting it back to USDe, thus perpetuating a cycle. This leveraging loop resulted in exorbitant APYs of 24%, 36%, and even exceeding 70%. Many users mistakenly perceived this as low risk due to Binance’s reputation.
The unexpected market volatility caused a rapid USDe depegging, leading to extensive liquidations. Xu also pointed out inadequate risk management concerning assets like WETH and BNSOL, which exacerbated the situation, causing some tokens to temporarily trade near zero. While Xu refrained from direct accusations, he underscored the necessity for industry leaders like Binance to emphasize transparency, enhance risk controls, and foster responsible innovation. He warned that short-term yield pursuits could erode long-term trust.
Changpeng Zhao’s Counterargument
In response, Binance’s co-founder and former CEO, Changpeng Zhao (CZ), refuted Xu’s claims. During a Binance Square AMA on January 31, 2026, CZ attributed the October 10 sell-off to macroeconomic factors related to tariffs, rather than any failures or deliberate actions by Binance.
Examining Binance’s Position
CZ argued that given the vast scale and liquidity of Bitcoin, it would be challenging for any single entity to sway prices merely by “dumping.” Although Binance’s internal review post-incident identified technical irregularities, such as temporary transfer or UI display issues and index deviations, CZ dismissed these as causal factors in the crash.
Support from Industry Leaders
Haseeb, Managing Partner at Dragonfly, also contested Star Xu’s allegations. He highlighted that the timing of the USDe depegging, which occurred after Bitcoin had already hit its lowest point, coupled with the isolation of this event on the Binance platform, undermines the credibility of such claims.
BTC trading at $78,537 on the daily chart | Source: BTCUSDT chart on Tradingview.com
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