In a provocative statement, Star Xu, the CEO of OKX, has laid blame for the significant market crash on October 10 primarily on a marketing campaign executed by Binance. Xu highlighted that a product introduced by Binance led to unsustainable levels of leverage in the cryptocurrency sector, resulting in catastrophic financial repercussions.
In a post on social media, Xu emphasized the straightforward nature of the events leading up to the crash, declaring, “No complexity. No accident.” He pointed to the irresponsible marketing practices of certain companies, stating that Binance’s actions played a pivotal role in that disastrous day when billions were liquidated across the market.
The repercussions of the crash were severe, with the market witnessing over $19 billion wiped out in a single day. This seismic event not only affected the value of Bitcoin but also caused a downturn in numerous other digital assets, many of which have failed to recover to their previous heights. Xu noted that since then, the microstructure of the crypto market has undergone significant changes, hinting at long-lasting impacts.
Xu specifically blamed an attractive yield offering via the USDe stablecoin introduced by Binance, which allowed users to earn 12% APR. He criticized the offering for being excessively risky, akin to “hedge-fund-level risk,” and warned that it could trap traders in a cycle of leverage. This reckless leverage, he argued, was susceptible to market shocks—a claim underscored by the volatility that surfaced after U.S. President Donald Trump imposed tariffs, which sent shockwaves throughout the financial markets.
The instability was exacerbated by rapid depegging of the USDe stablecoin, leading to widespread liquidations as traders found themselves ensnared in a precarious situation with little understanding of the risks involved. Xu lamented the damage inflicted upon global users and companies, including those affiliated with OKX, and indicated that repairing this damage would take significant time.
The October crash has been characterized as the largest liquidation event in crypto history, with a staggering 1.6 million traders affected in the span of just 24 hours. The fallout saw Bitcoin significantly drop from its all-time high just days prior, with current trading levels lingering below the $100,000 mark, at times dipping below $81,000.
In response to Xu’s comments, Changpeng Zhao, Binance’s co-founder and ex-CEO, opted for caution, stating he would refrain from further commentary but shared retweets from others who dismissed Xu’s assertions. Meanwhile, in the wake of the October events, Binance faced criticism when some users reported pricing errors, leading the exchange to offer hundreds of millions in compensation to those impacted.
The ongoing debates and ramifications of October’s crash continue to unfold, raising questions about the stability of the cryptocurrency market and the responsibilities of major players like Binance in shaping market dynamics.
