The crypto community is currently embroiled in a significant debate surrounding the precise causes of the market crash on October 10th, with leading figures from major exchanges pointing fingers and offering contrasting narratives. At the heart of this dispute is Binance, the world's largest crypto exchange, which has been accused of triggering the event.
Allegations of Irresponsible Marketing and Systemic Risk
Star Xu, the founder of crypto exchange OKX, has explicitly blamed Binance for the October 10th crash, attributing it to "irresponsible marketing campaigns." Xu's primary contention centers on the offering of over 12% APY on Ethena's USDe product on Binance, which he claims was boosted by looped leverage without adequate risk mitigation measures. He argued that this created a structural vulnerability that contributed to the market's deleveraging event, fundamentally altering Bitcoin's correlation with traditional markets. Xu urged Binance, as an industry leader, to engage in open discussions about 'systematic risk' to foster lasting trust in the nascent crypto industry and prevent a repetition of past mistakes.
Binance's Rebuttal and Counterarguments
Binance, however, has vehemently dismissed these allegations, asserting that the crash was primarily driven by a macro shock—specifically, updates regarding Donald Trump's tariffs—which led to a broader risk-off move and a subsequent $19 billion liquidation cascade. While the exchange acknowledged experiencing technical issues with its trading system, including a brief degradation of its asset transfer system and the depegging of certain assets like USDe, BNSOL, and WBETH, it maintained that these were not the root cause of the crash. This position is supported by figures like Chainlink's Zach Rynes, who suggested that the USDe depeg occurred after the liquidation cascade, implying Binance played a minor role in initiating the flash crash. The divergence in these accounts underscores a critical need for objective analysis. Without independent, third-party examination of the events of October 10th, the industry faces an ongoing challenge in understanding the true catalysts behind such market events and implementing robust measures to safeguard against future occurrences.
