Star Xu has removed the diplomatic gloves. In a blistering post on X today, the OKX founder explicitly accused rival Binance of engineering the market conditions that led to the catastrophic October 10 flash crash. While Binance has long maintained that macroeconomic shocks, specifically the Trump tariff announcements, sparked the sell-off, Xu argues the $19 billion liquidation event was a direct result of “irresponsible marketing campaigns” for Ethena’s USDe.
The “Yield Loop” Accusation
Xu’s allegation centers on Binance’s treatment of USDe, a synthetic dollar backed by a delta-neutral hedge. According to Xu, Binance aggressively promoted a 12% APY on USDe and, crucially, allowed users to use the token as collateral with the same risk parameters as standard stablecoins like USDT and USDC.
This policy, Xu claims, encouraged a massive accumulation of hidden leverage. Traders would deposit USDe, borrow other assets, and loop the trade to capture yield. When volatility spiked on October 10, the loop unraveled.
“No complexity. No accident. 10/10 was caused by irresponsible marketing campaigns by certain companies… The crypto market’s microstructure fundamentally changed after that day.” , Star Xu
The fallout was historic. On October 10, 2025, Bitcoin plummeted from highs near $122,000 to roughly $105,000 in hours, wiping out $19 billion in open interest, nine times the volume of the FTX collapse. Today, the market still bears the scars, with Bitcoin (BTC) struggling to reclaim ground at $83,048 (-0.7%) and BNB trading flat at $851.
Binance Defends, Market Bleeds
Binance has dismissed the narrative that its risk engines failed. In previous statements and fresh rebuttals, the exchange pointed to the timing of Donald Trump’s tariff policies as the primary catalyst for the risk-off event. They acknowledged “technical glitches” between 21:18 and 22:15 UTC on the day of the crash but vehemently denied that their USDe integration was the systemic trigger.
The data paints a complicated picture. While USDe did briefly de-peg during the chaos, dropping to $0.65 on some order books, supporters argue this was a symptom of the liquidity crunch, not the cause. However, Xu’s critique strikes at a deeper industry nerve: the blurring line between “stable” collateral and structured yield products.
Institutional Fallout
The timing of this public spat is critical. The crypto market is currently in a deep corrective phase, with Bitcoin down nearly 30% from its October peak. Ethena (ENA), the token at the heart of the dispute, has withered to $0.15, a far cry from its bull market valuations.
For institutional allocators, Xu’s comments serve as a stark warning about counterparty risk in centralized exchanges. If the “microstructure fundamentally changed,” as Xu claims, the era of treating synthetic yield-bearing dollars as cash equivalents may be over, forced offline by the liquidations of October 10.
