A sharp disagreement has erupted among crypto exchange executives about what triggered the brutal October 10, 2025market crash, as Star Xu, founder and CEO of crypto trading platform OKX, publicly blames Binance-linked high-yield campaigns and risk practices for the turmoil — a claim Binance leadership strongly disputes.
Xu has said the October flash crash — which saw massive forced liquidations and volatility across digital assets — was not merely an accident but the result of “irresponsible marketing campaigns” and structural risk buildup, particularly tied to high-yield USDe promotion and collateral rules that encouraged hidden leverage. He argues that user-acquisition incentives like double-digit APYs on USDe created systemic fragility by normalizing leverage loops and obscuring risk for traders.
In a public post on social media, Xu emphasized that his team observed the market’s microstructure fundamentally shift after the crash, saying the fallout did “real and lasting damage” to investor trust and industry stability — even more so than previous blowups.
Binance’s leadership has flatly denied the assertion that its activities caused the crash, framing the event instead as a broader market reaction driven by macroeconomic shocks, elevated leverage across the ecosystem, and liquidity withdrawal by market makers during stress. Changpeng Zhao — the co-founder of Binance — has characterized accusations as misplaced and emphasized that his firm compensated affected users and maintained operational integrity through the sell-off.
Binance says its systems remained stable during the turbulence and that issues occurred primarily after most liquidations had already occurred, disputing claims that internal pricing discrepancies or collateral policy changes were the root cause.
The renewed criticism reignites scrutiny over how exchange-driven incentives and yield products can shape market behavior and risk dynamics. Critics argue that aggressive promotions — especially those that allow risky assets to be treated like stablecoins or overlooked in collateral risk models — can amplify volatility and dehydration of liquidity when markets turn.
Supporters of Binance’s stance maintain that blaming a single exchange oversimplifies a complex event involving macro pressure, high leverage, and broader structural stresses across crypto markets.
This public clash reflects deeper tensions in an evolving industry where exchange behavior, risk controls and user protection are under intense scrutiny. With regulators and institutional participants paying closer attention to market stability, the debate highlights questions around whether existing incentives and risk practices are sustainable — and whether clearer structural safeguards will be needed to prevent similar episodes in the future.
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