You Won’t Believe Who Caused the Oct 10 Crypto Crash

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In the glittering ballroom of numbers where verdicts are typed in the currency of dreams, two sovereigns of the exchange-Star Xu, with the air of a modern Odysseus, and Changpeng Zhao, the unflustered czar of Binance-conspired to turn a market tremor into a virtuoso performance of irony. October’s 10th and 11th became a stage where microstructures whispered, and the audience gasped at the poetry of leverage and misaligned incentives.

  • Xu, with a scholar’s cadence and a sting of gamester’s bravado, blamed Binance’s USDe campaign for the October 10 crash, a $19 billion unraveling that looked, to his trained eye, like a well-placed spark in a powder magazine.
  • Binance’s CZ retorted with the dry humor of a man who has weathered storms and PR storms alike, calling the charges far-fetched while reminding the world that customers were fully compensated.
  • The quarrel illuminates a wilder circus: high-yield tokens, loops of leverage, and exchange-driven incentives that make risk look respectable in the glare of a monitor.

Months after the thunder, the two titans still debate in a hall of mirrors. Xu, the OKX impresario, has grown bolder in his critique, casting Binance’s actions as the invisible conductor of the crash. Zhao, the founder who built an empire from a keyboard and a dream, maintains a stubborn posture of denial, insisting the catastrophe had other, less glamorous roots.

“On October 10, tens of billions of dollars were liquidated. As CEO of OKX, we observed clearly that the crypto market’s microstructure fundamentally changed after that day,” Xu asserted, framing the catastrophe as less a weather pattern than a deliberate design flaw orchestrated by a high-APY siren song on USDe.

No complexity. No accident.
10/10 was caused by irresponsible marketing campaigns by certain companies.

On October 10, tens of billions of dollars were liquidated. As CEO of OKX, we observed clearly that the crypto market’s microstructure fundamentally changed after that day.…

– Star (@star_okx) January 31, 2026

The public quarrel centers on one of crypto’s most dramatic episodes: roughly $19 billion of leveraged positions were swept away in a single day, provoking violent price swings and laying bare fragilities in market structure and risk governance across major platforms.

What triggered the market crash

In a detailed missive on X, Xu argued that October 10 was not a mystic accident but a designed consequence of “irresponsible marketing campaigns by certain companies.”

He contends that this design nudged vast sums into USDe without a reliable map of risk. Unlike tokenized money-market vehicles such as BlackRock’s BUIDL or Franklin Templeton’s BENJI, USDe, in Xu’s telling, behaves more like a tokenized hedge fund: arbitrage and algorithmic strategies dressed as stability, brazenly flirting with danger.

Many users, he says, perceived USDe as a sterling stand-in for a stablecoin, even as it carried more volatility and leverage alongside its gloss of steadiness.

Leverage loops and systemic risk

Xu sketches a perilous carousel: traders morph USDT or USDC into USDe, pledge USDe as collateral to borrow more USDT, turn the borrowed funds back into USDe, and begin again. A loop that seems to conjure yields of 24%, 36%, even 70%+ with a conspiratorial whisper of “low risk” because a big platform has deigned to offer them. The ecosystem, in his view, absorbed the risk like a sponge greedily soaking up rain, until the rain came with a storm.

When volatility spiked, USDe’s peg wavered, unleashing cascading liquidations across exchanges. Weaknesses in risk controls around wrapped Ether and liquid-staking tokens exacerbated the panic, sending some tokens tumbling toward near-zero in the fever of the sell-off.

Xu even argues the damage eclipsed the scars left by FTX, citing broad losses for traders and crypto companies alike, including OKX’s own customers.

CZ rejects allegations as “Far-Fetched”

Zminds sharpen with a wry twist as Zhao-cool as a cucumber in winter-rejects the idea that Binance triggered the poor market’s tantrums. Speaking in a Q&A on Binance’s channels, Zhao called the accusations “far-fetched,” Bloomberg notes, and emphasized Binance’s regulatory oversight in Abu Dhabi, plus additional monitoring by U.S. authorities. Regulators, he reminded the world, have the power to inspect Binance’s gears and cogs.

Binance reportedly paid out around $600 million in compensation, including $300 million to retail traders and $100 million set aside for institutions facing liquidity stress. Zhao also warned of online campaigns and paid actors attempting to tarnish Binance’s name, a reminder that in the digital theater, reputation is a currency with as many counterfeit notes as there are keystrokes.

Why the dispute matters for crypto markets

The wrangle raises larger questions about market structure, leverage, and transparency in crypto trading. October’s liquidation gulped down the myth of effortless yields and revealed how collateral policies and appetite for risk can grow teeth in times of volatility.

The themes echo past collapses-the Terra-Luna disaster of 2022 and the FTX debacle that year-proof that interlinked systems and aggressive leverage create a tinderbox. Xu insists he isn’t aiming at Binance so much as spotlighting the responsibility of large platforms to the markets they influence. Zhao, for his part, holds that Binance played by the rules and did not cause the flame, but merely contained the embers after the spark had leapt.

Impact and what comes next

Expect the debate to ripple into how yield products are designed, how collateral is regulated, and how marketing disclosures are drafted. The broader question remains: are crypto platforms neutral marketplaces, or active forces shaping risk-taking behavior? As the markets expand, the October drama offers a reminder that high yields, leverage, and complex products can hide peril in their gleaming façades. The response of exchanges-how they recalibrate risk, disclosure, and trust-will help decide the future tempo of investor confidence and market stability.

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2026-01-31 09:18