Original | Odaily Planet Daily (@OdailyChina)
Author | Ding Dang (@XiaMiPP)
Last weekend, a wave of concentrated criticism against Binance erupted again on X. This time, it was the settling of old scores reignited.
The fuse of the storm was lit on January 26th when ARK Invest CEO Cathie Wood (nicknamed "Cathie Wood") stated in an interview with Fox Business that while gold, silver, and US stocks have been surging recently, the reason cryptocurrencies aren't rising is the lingering aftershocks of the system failure at Binance on October 11th last year (referred to as the "1011 Incident"), which caused $28 billion in leveraged positions to be liquidated.
As an early investor in Coinbase and one of the first Wall Street fund managers to incorporate Bitcoin into institutional investment narratives, Cathie Wood holds a natural cross-industry voice between traditional finance and the crypto industry. Therefore, these remarks quickly revived the market's collective memory of the 1011 Incident. Moreover, it happened at a time when the market sentiment was low, and everyone was in the mood for gossip, allowing the matter to continue fermenting.
Binance quickly responded. Co-CEO He Yi stated that Cathie Wood is not a Binance user, and Binance does not serve US entities. The implication seemed to suggest that Cathie Wood did not understand the real situation, or that there was some kind of conspiracy theory behind it.
The Cause and Effect of the 1011 Incident: The Butterfly Effect Triggered by a "System Failure"
To understand this crusade, one must first clarify the sequence of events of the 1011 Incident. Simply put, it was a "black swan" event in the crypto market: that day, the market suddenly experienced violent fluctuations, with the total global crypto market capitalization evaporating over $500 billion, and the scale of leveraged position liquidations exceeding $19 billion, making it one of the largest leveraged liquidation events in the history of the crypto industry. Everyone from a large number of ordinary users to many well-known market makers and VCs suffered significant losses in this event.
The reason Binance is accused of being the "culprit" is that at the critical juncture of the sharp market fluctuations, there was a noticeable liquidity anomaly within its platform. Whether officially described as a "software issue" or a "brief malfunction of the trading module," the result seen by the market was extremely brutal: the Auto-Deleveraging (ADL) mechanism was triggered, cross-account chain liquidations started, and some market maker accounts suffered devastating losses in a short period, even being forced to exit the market.(For details, read: "Detailed Explanation of the ADL Mechanism for Perpetual Contracts, Why Your Profitable God Trade Gets Automatically Closed?".)
Another clue that has been repeatedly brought up points to Binance's USDe incentive activity at the time. This activity promoted a 12% annualized yield, and some users also used revolving loan methods to collateralize assets like USDe, amplifying both returns and risks. When USDe "depegged" (more accurately, the price difference between platforms, on-chain and off-chain), it triggered large-scale liquidations.
After the event, Binance issued statements repeatedly emphasizing that the sell-off at the time was mainly driven by broader market conditions, not a failure of the platform's own system. Subsequently, Binance paid approximately $283 million in compensation to users affected by the depegging and related issues. This compensation did quell the anger of some crypto users in the short term.
But the controversy did not disappear. Perhaps it was because Binance retrospectively modified the K-line trends of some tokens that had abnormal movements after the fact, or the long-standing doubts about the Binance Alpha listing mechanism—these accumulated grievances found a new outlet through the 1011 public opinion incident.
As public opinion heated up, it now seems to be gradually evolving into camp divisions. Odaily Planet Daily will introduce some of the main characters from both sides of the public opinion below.
One of the Accusing Camps: Leonidas's Long-Term Offensive
The earliest to intensively open fire was Leonidas, co-founder of ZapApp, an important figure in the Bitcoin inscription ecosystem and a core promoter of DOG (a popular dog Meme coin on Bitcoin).
He almost daily outputs criticism about Binance on X, becoming one of the most visible representatives of the current anti-Binance camp. However, looking closely at his expressions, one finds that what he is pursuing is not 1011 itself. For Leonidas, 1011 is more like "evidence": an example that can be used to prove that Binance is sucking the blood of the entire crypto industry.
His grudge with Binance originated from him publicly demanding Binance list the token, which was not approved. Leonidas blasted Binance for requiring projects to pay an extremely high proportion of the token supply (he claimed up to ~10%) as a listing "fee," which Binance or insiders then sold off in large quantities, causing the projects and retail investors to suffer heavy losses.
Leonidas directly called CZ the "biggest liar in crypto history" and the "biggest liar in human civilization history." He believes that although CZ has ostensibly stepped down as CEO, he still holds 90% of Binance's shares, making Binance his "proxy tool." Every post by CZ is interpreted by Leonidas as hypocritical because, in his view, CZ "extracts from the market" through Binance while preaching鸡汤 (chicken soup for the soul) to retail investors. In his opinion, the $283 million Binance later compensated users precisely proves its direct responsibility, stating, "Only guilty companies pay that much money."
From this perspective, there is a direct interest conflict between Leonidas and Binance at the project level, and his emotional expression is clearly mixed with personal grievances. At the same time, he also represents a group long dissatisfied with the power structure of CEXs.
"Friendly Business" Joins the Fray: Star's Systemic Risk Accusations
The one who truly pushed the conflict to its climax was OKX founder Star (Xu Mingxing). He pointed out that after 1011, the microstructure of the crypto market underwent fundamental changes, its destructiveness even exceeding the collapse of FTX. He believes the core trigger was Binance's user growth activity—offering a 12% annualized yield for USDe and allowing it to enjoy the same collateral treatment as USDT and USDC, but lacking sufficient restrictions.
In his view, USDe is essentially closer to a "tokenized hedge fund" rather than a low-risk money market product like BlackRock's BUIDL. Lured by yields, users swapped stablecoins for USDe, creating implied returns of 24%–70% through循环借贷 (revolving loans), causing systemic risk to accumulate rapidly in a short time. When volatility truly arrived, the depegging of USDe, coupled with risk management flaws in WETH and BNSOL,共同放大冲击 (collectively amplified the impact), with some asset prices once approaching zero.
Xu Mingxing emphasized that his intention was not to attack Binance but to希望行业面对真实问题 (hope the industry faces the real problems); as the world's largest platform, Binance should prioritize stability and transparency, not掩盖风险 (cover up risks) through high-leverage marketing.
But the reality is, as one of Binance's main competitors, OKX has long been suppressed by Binance. As the helmsman of OKX, it is reasonable for Xu Mingxing to highlight OKX's "compliant and user-oriented" image in his statements to weaken Binance's market monopoly.
Faced with Xu Mingxing's accusations, both sides naturally engaged in a war of words, with attacks and counterattacks. However, more interestingly, both CZ and He Yi were once employees under Xu Mingxing. Although online it is tense, offline they still maintain a微妙 (subtle) industry relationship. He Yi even threw out a "friendly" group photo with Xu Mingxing from December, stating they had privately discussed "poaching" matters (Binance poached a product manager from OKX) but had not discussed the 1011 incident, which was full of sarcasm.
CZ Unfollows Toly, Another Undercurrent of Public Chain Competition?
Another highlight of this crusade was CZ unfollowing Solana co-founder Anatoly Yakovenko's X account. The reason was that Toly转发 (retweeted) Xu Mingxing's tweet criticizing Binance, adding a meaningful comment: "It only took 18 months after the accident to recover." This暗指 (implied) that Solana (SOL) took 18 months after the FTX crash to return to its 2021 bull market levels, and now Binance is being insinuated as a similar "accident" responsible party. Toly's move was equivalent to indirectly taking sides, supporting the criticism against Binance.
Some crypto users began to worry: Will it be harder for coins in the Solana ecosystem, especially Meme coins, to be listed on Binance in the future?
Behind this is the head-on competition between BSC and Solana for Meme liquidity. The former is going all out to compete for the new round of Meme narrative, while the latter was once the most important incubator for this wave. The game between public chains may be quietly emerging in this public opinion war.
Support Camp: Truth or PR?
Perhaps thanks to Binance's long-term maintenance of KOL relationships, the attitude towards Binance in the Chinese circle is relatively mild. However, in the face of these serious accusations, there are still few major KOLs who dare to publicly support Binance. Among them, EnHeng, nicknamed the "Binance Crown Prince," is one of them.(Supplementary reading: "Post-05 Crypto Madman EnHeng: 'Binance Crown Prince' Is Just My Camouflage".)
Currently, those who can support Binance come more from relatively neutral analysts. For example, trader Benson pointed out that Binance does have responsibility, but USDe was not the starting point of the crash. Looking at the timeline, when the market bottomed at 5:20, USDe was only slightly depegged; the real drop to 0.65 occurred after the rebound.
He believes that what was more abnormal was the large-scale price dislocation between Binance and other exchanges between 5:18—5:20: half of the tokens hit the lowest prices across the entire market on Binance, with some deviations as high as 100%, and the USDT pair was significantly lower than the USD pair. He believes that, reasoning from the result, it is more likely that there was a problem at Binance's system level, rather than simply caused by market makers withdrawing liquidity. He called for taking the opportunity of Binance's released review to allow the industry to have a more sufficient and public discussion of the event.
Dragonfly managing partner Haseeb Qureshi holds a similar view. He believes that the statement "Binance and Ethena caused the crash" is difficult to成立 (hold up) in terms of timeline, market transmission path, and evidence. He pointed out that the Bitcoin price bottomed about 30 minutes before the USDe appeared abnormal on Binance,明显因果倒置 (the causality is clearly reversed);同时 (at the same time), the USDe price deviation only occurred on Binance and did not spread to other trading platforms, unable to explain the large-scale liquidations across the entire market, which is fundamentally different from events like Terra that had a global balance sheet impact. In fact, regarding the USDe depegging, Haseeb had already interpreted it shortly after the 1011 incident. For details, refer to "Ethena Investor Dragonfly: USDe Did Not Depeg, It Was Just Binance's 'Local Price Dislocation'".
In his view, a more reasonable explanation is the叠加 (overlay) of multiple factors: Trump's tariff remarks disturbed the market on Friday evening, Binance API abnormalities caused market makers to be unable to hedge across platforms, liquidation and ADL mechanisms amplified fluctuations, and the crypto market's lack of traditional financial-style circuit breakers and self-stabilizing mechanisms ultimately caused the行情 (market trend) to evolve along an unfavorable path. He emphasized that there is no simple and conspiratorial "single mastermind" for 10/11. Although the market was severely damaged, in the long run, it was not permanently destroyed, only needing time to修复流动性 (repair liquidity) and信心 (confidence).
After Haseeb expressed his support for Binance, CZ转发 (retweeted) this tweet, captioning it, "Dragonfly was once one of OKX's largest investors." However, Xu Mingxing later denied this in his response, stating that Dragonfly never invested in OKX, neither small nor large investments.
SAFU Adjustment: Remedy or Signal?
Amid the spreading Binance FUD, on January 30th, Binance announced in "An Open Letter to the Crypto Community" that it would adjust the asset structure of the SAFU fund, gradually converting the original $1 billion规模的稳定币储备 (scale stablecoin reserve) into a Bitcoin reserve, and plans to complete the exchange within 30 days of this statement. Binance will conduct regular checks on the asset size of the SAFU fund. If the market value of the SAFU fund falls below $800 million due to Bitcoin price fluctuations, Binance will supplement Bitcoin to restore the fund size to $1 billion.
However, regarding the specific purchase method of this $1 billion in BTC, Binance did not specify in the announcement. Odaily Planet Daily has inquired with Binance on this matter and has not yet received a response.
Conclusion
Looking back at this debate, the reason Binance has once again become the focus is perhaps not just because it "did something wrong," but because it is already big enough—big enough that any structural problems will first manifest themselves on it.
This is not the first crusade Binance has experienced, and it probably won't be the last. What is truly important is not just how the event responsibility is divided, but whether, as an industry hub, the leading exchange is willing to take on a higher level of stabilizing responsibility.
In a market that still highly relies on leverage, sentiment, and narrative drive, this debate itself is perhaps more important than the outcome.
