A public dispute between exchange executives and market makers has reignited debate over whether leverage, stablecoins, or macro forces were to blame for October’s historic crash.
Posted February 2, 2026 at 6:48 am EST.
Crypto Twitter lit up this weekend as old wounds reopened over what actually caused the October 10 liquidation cascade, one of the most violent crashes the market has ever seen.
The spark came from OKX CEO Star Xu, who argued that the crash stemmed from Binance’s handling of USDe, a yield-bearing token issued by Ethena. Xu said a high-APY campaign, combined with allowing USDe to be used as collateral like USDT or USDC, encouraged leverage loops that quietly built systemic risk. When volatility hit, he argued, USDe briefly lost its peg on Binance, setting off cascading liquidations that rippled across the market.
This story is an excerpt from the Unchained Daily newsletter.
Subscribe here to get these updates in your email for free
Thank you for subscribing
‘;
}
// Check if event.data indicates form submission
}
});
]]>
That framing was quickly challenged. Dragonfly’s managing partner Haseeb Qureshi pushed back hard, calling the Binance-centric explanation misleading. His core point: the timeline doesn’t fit. Bitcoin had already sold off and liquidations were underway well before USDe showed stress on Binance.
Just as importantly, USDe only diverged on one venue. A truly systemic trigger, Qureshi argued, would have shown up everywhere, as seen in events like Terra or FTX.
Adding weight to that view, Wintermute CEO Evgeny Gaevoy also rejected the idea that Binance was the root cause. He described October 10 as a macro-driven flash crash in an extremely leveraged market, made worse by thin liquidity, API outages, and liquidation engines that prioritize solvency over stability.
Powered by WPeMatico
