Old Case Resurfaces: The 1011 Crash Sparks a Mixed Battle of Public Opinion Between Exchanges and Ecosystems
"Old Case Resurfaces: The 1011 Crash Sparks a Public Opinion Battle Between Exchanges and Ecosystems"
Over the weekend, a wave of criticism targeting Binance reignited on X (formerly Twitter), centered on revisiting the "1011 Event" from October 11, 2023. The controversy was sparked by ARK Invest CEO Cathie Wood, who suggested in an interview that the crypto market's recent stagnation was an aftershock of a $28 billion leverage liquidation event caused by a system glitch on Binance.
The 1011 Event was a major market crash where the global crypto market lost over $500 billion in value, with leverage liquidations surpassing $19 billion. Critics point to a liquidity anomaly on Binance during the crash, which triggered its Auto-Deleveraging (ADL) mechanism and caused massive, cascading liquidations. The exchange's high-yield USDe promotion was also cited as a contributing risk factor. Binance later paid approximately $283 million in compensation to affected users but maintained the sell-off was driven by broader market conditions.
The criticism has evolved into a broader industry debate. A key figure in the accusatory camp is Leonidas, a founder in the Bitcoin Ordinals ecosystem, who has long criticized Binance's listing practices, alleging the exchange demands high token allocation fees from projects. More significantly, OKX founder Star (Xu Mingxing) entered the fray, arguing the 1011 crash fundamentally altered the market's microstructure. He claimed Binance's USDe promotion, which offered 12% APY and was treated as collateral, introduced massive systemic risk akin to a "tokenized hedge fund," not a stablecoin.
The conflict also revealed underlying public chain competition. CZ unfollowed Solana co-founder Anatoly Yakovenko (Toly) after he shared Xu's critical post, hinting at the rivalry between Binance's BSC chain and Solana for meme coin liquidity.
In Binance's defense, some analysts offered more neutral perspectives. Trader Benson and Dragonfly's Haseeb Qureshi argued that while Binance had some responsibility, the "USDe caused the crash" narrative doesn't align with the timeline, as the market bottomed before USDe depegged on Binance. They suggested a confluence of factors—including Trump's tariff comments, API issues preventing market makers from hedging, and a lack of circuit breakers—led to the crash.
Amid the FUD, Binance announced it would convert the assets in its $1 billion SAFU insurance fund from stablecoins to Bitcoin.
The article concludes that the intense scrutiny on Binance stems from its dominant size, meaning any structural industry problem will manifest there first. The core of the debate is not just assigning blame for one event, but whether the leading exchange will assume a higher responsibility for market stability.
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