Evgeny Gaevoy, the founder of Wintermute, has entered the heated discussion surrounding last October’s cryptocurrency market crash. He has publicly countered statements made by Cathie Wood of ARK Invest and Star Xu of OKX, who attribute the dramatic decline—resulting in approximately $19 billion in liquidations—to the actions of Binance.
Gaevoy criticized the rhetoric surrounding the event, urging public figures to choose their words more carefully. He dismissed claims that a “software glitch” was to blame, characterizing the incident instead as a “flash crash on a mega leveraged market on illiquid Friday night driven by macro news.”
Xu, on the other hand, has pointed fingers at Binance for allegedly encouraging users to convert stablecoins into its tokenized product, USDe, without adequate risk disclosures. He claims that Binance’s marketing strategy, which offered up to 12% annual percentage yields (APY) on USDe, led users to treat it as collateral similarly to more established stablecoins like USDT and USDC. As a result, users—by converting stablecoins into USDe and back—created leveraged loops that escalated systemic risk across global markets.
Xu painted a dire picture, stating that when volatility struck, USDe quickly lost its peg, and subsequent cascading liquidations led to widespread market destabilization, where some tokens momentarily traded near zero. He emphasized the long-term impact of the crash on users and crypto companies, including OKX, calling for more open discussions about systemic risks to ensure the industry’s responsible maturation. Xu also alluded to potential misinformation campaigns targeting his firm in light of his candid remarks.
In response, Binance co-founder Yi He took to X to defend the exchange, asserting that seasoned traders understand the complexities of market fluctuations. In a now-deleted message, she indicated that Wood, who linked the crash to a software issue, lacked sufficient expertise on the matter, as she does not actively use Binance. Wood had claimed that about $28 billion was wiped off the market due to leveraging events.
Many observers have suggested that external factors, such as President Trump’s announcement of a 100% tariff on Chinese imports, may have triggered the market downturn. Following the crash, Bitcoin and Ethereum prices sharply declined, igniting panic trading.
At one point, USDe depegged dramatically on Binance, trading at just $0.65, while it remained stable on other exchanges. In a comprehensive statement released on January 30, Binance attributed the crash to macroeconomic shocks, market maker risk protocols, and network congestion on Ethereum. They asserted that their core operations remained unaffected during the crisis, although some balances were erroneously displayed as zeros. Binance has since compensated affected users with $328 million, an increase from an initial payout of $283 million announced shortly after the incident.
