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, causing damage that many described exceeded the fallout from the FTX collapse in 2022.
Star Xu: Binance USDe Marketing Responsible For October 10 Crash
In a detailed statement on X, Star Xu said the October 10 sell-off was not a complex or mysterious market event, but the direct result of “irresponsible marketing campaigns,” which now appears to have fundamentally altered crypto market microstructure. On this particular day, Bitcoin experienced a 16.5% flash crash, falling from $121,000 to $101,000.
According to Xu, the trigger for such a negative event was Binance’s temporary user-acquisition campaign offering up to 12% APY on USDe, while allowing the asset to be used as collateral on the same footing as USDT and USDC, with insufficient limits. Xu explained that USDe is not a conventional stablecoin but rather a “tokenized hedge fund product,” issued by Ethena, where user capital is deployed into index arbitrage and algorithmic trading strategies before being tokenized. He argued that this design embeds hedge-fund-level risk into an asset that was presented to users as functionally equivalent to low-risk stablecoins.
Notably, users were encouraged to convert USDT and USDC into USDe for yield. But market risk escalated when traders started using this USDe as collateral to borrow more USDT to convert it again into USDe, and repeat the cycle. This leverage loop resulted in outrageous APYs of 24%, 36%, and even over 70%, which many users perceived as low risk simply because they were offered on a major exchange such as Binance. However, a surge in market volatility would cause the USDe to depeg rapidly, triggering massive waves of liquidations. Xu said weak risk management around assets like WETH and BNSOL amplified the shock, resulting in some tokens briefly trading near zero.
While insisting he was not assigning blame, Xu emphasized the need for industry leaders such as Binance to prioritize transparency, stronger risk controls, and responsible innovation, warning that short-term yield games undermine long-term trust.
CZ Fires Back
Notably, Binance co-founder and former CEO Changpeng Zhao (CZ) has pushed back on Xu’s narrative. Speaking in a Binance Square AMA on January 31, 2026, CZ said the October 10 sell-off was due to tariff-related macroeconomic news, not to Binance system failures or deliberate actions.
CZ argued that given Bitcoin’s sheer market scale and liquidity, it would be extremely difficult for any single entity to influence prices simply by “dumping.” Binance’s internal post-incident review did reveal technical irregularities that occurred on the day, including temporary transfer or UI display issues and deviations in certain indices, but CZ denied that these played a causal role in the crash.
Managing Partner at Dragonfly, Haseeb, also countered Star Xu’s accusations, stating that the timing of the USDe depegging, which occurred after Bitcoin already bottomed, as well as the isolation of this event on the Binance exchange, offered a strong opposition to such claims.
