OKX's Star Xu publicly accused Binance of causing October 10's catastrophic crash via USDe yield campaigns. Binance and CZ deny it, blaming macro factors instead.
OKX CEO Blames Binance for October's $19B Crash
The simmering tensions between two of crypto's largest exchanges exploded into public view on January 31, 2026, when OKX CEO Star Xu directly blamed Binance for the catastrophic October 10, 2025 market crash that liquidated $19.16 billion in leveraged positions and sent Bitcoin tumbling from $64,000 to $59,000 in a matter of hours. The accusation—delivered four months after the event—marks one of the most direct public conflicts between major crypto platforms and raises serious questions about systemic risk management in the industry.
Star Xu's core claim centers on Binance's USDe stablecoin yield campaigns, which he argues created "dangerous leverage loops" that amplified systemic risk across the market. According to Star's analysis, Binance's promotional campaigns encouraged users to deposit Ethena's USDe stablecoin to earn attractive yields, often exceeding 20% APY. Users could then use that deposited USDe as collateral to borrow additional funds at high loan-to-value ratios, deposit those borrowed funds back into yield programs to earn more returns, and repeat the cycle multiple times.
This recursive borrowing strategy—sometimes called "looping" or "yield farming leverage"—is not inherently problematic in isolation, but becomes systemically dangerous when adopted at scale across thousands of users simultaneously. Each loop increases a user's effective leverage exponentially. A user who deposits $10,000 in USDe, borrows $8,000 against it, redeposits that $8,000, borrows another $6,400, and repeats can easily achieve 3x-5x leverage or higher depending on the loan-to-value ratios and number of iterations.
When market conditions shifted on October 10, 2025—triggered by President Trump's announcement of tariffs against China and Mexico—risk appetite evaporated instantly. As Bitcoin and other crypto assets began declining, collateral values dropped, forcing liquidation engines to unwind leveraged positions. For users engaged in USDe leverage loops, this created a self-reinforcing cascade: liquidations reduced collateral values, triggering more liquidations, which further reduced values, creating a feedback loop that accelerated the crash far beyond what macro fundamentals alone would have caused.
Star Xu argues that Binance bears responsibility for designing and aggressively promoting yield products that incentivized this behavior without adequate risk disclosures or safeguards. His implication is that Binance prioritized user growth and trading volume over systemic stability, creating conditions where a relatively modest external shock could trigger a catastrophic unwinding.
Binance and founder Changpeng Zhao (CZ) rejected the allegations forcefully. In statements released shortly after Star's comments went public, Binance attributed the October crash to macro factors including tariff fears, broader equity market weakness, and risk-off sentiment that affected all asset classes simultaneously. CZ called Star's blame "unfair" and argued that pinning a market-wide deleveraging event on a single exchange's product offerings misunderstands the complexity of what occurred.
Binance's defense highlights that October 10 saw coordinated selling across equities, commodities, and crypto—not just isolated to Binance users or USDe-related positions. The S&P 500 dropped over 2% that day, gold sold off despite its safe-haven status, and Bitcoin fell across all exchanges regardless of whether users were engaged in USDe strategies. This suggests external macro forces were the primary driver, with leverage amplification as a secondary factor rather than the root cause.
However, data from blockchain analytics firms shows that Ethena's USDe supply had grown significantly in the months leading up to October, reaching over $3 billion at its peak with a substantial portion deposited on Binance. While this doesn't prove causation, it demonstrates that USDe-related leverage was material enough to potentially contribute to the violence of the October crash even if it didn't initiate it.
The timing of Star Xu's public accusation—four months after the event—is itself notable. Industry insiders speculate this could reflect ongoing private disputes between the exchanges over liability, customer complaints, or disagreements about future risk management standards. Alternatively, it may signal competitive positioning as both platforms compete for institutional clients who increasingly demand robust risk controls and transparency.
The public feud damages both exchanges regardless of who's factually correct. For OKX, accusing a competitor of systemic negligence without definitive proof risks appearing opportunistic or deflecting from its own risk management practices. For Binance, even defending against the allegations keeps the October crash in headlines and reminds institutional capital of crypto's volatility and the dangers of under-regulated yield products.
More broadly, the dispute highlights unresolved questions about exchange accountability for product design. Should exchanges be held responsible when users voluntarily engage in high-risk leverage strategies? What duty of care do platforms owe to users who might not fully understand the systemic risks of recursive borrowing? And who bears liability when exchange-promoted products contribute to market instability—even if external factors ultimately trigger the crash?
Regulators globally are watching these dynamics closely. The European Union's Markets in Crypto-Assets (MiCA) regulation includes provisions requiring exchanges to assess and disclose systemic risks from their products. In the US, the SEC and CFTC have increased scrutiny of crypto lending and yield products following multiple failures in 2022-2023. The Binance-OKX dispute provides ammunition for arguments that self-regulation has failed and stricter oversight is necessary.
For now, the October 10 crash remains a contested event with competing narratives. Star Xu's technical explanation focuses on USDe leverage loops as the amplifying mechanism that turned a correction into a catastrophe. Binance's macro-focused defense emphasizes external tariff shocks and risk-off flows as the initiating cause. The truth likely involves both—external macro pressure combined with excessive leverage built up through yield farming strategies.
Whether this public blame game leads to changes in how exchanges design yield products, disclose risks, or manage systemic exposure remains to be seen. What's clear is that four months later, the industry is still processing what happened and who, if anyone, should be held accountable for one of crypto's worst single-day liquidation events