OKX founder and CEO Star Xu has challenged the way Binance’s response to the October 10, 2025, cryptocurrency market crash has been framed, arguing that the event inflicted tens of billions of dollars in losses across the digital-asset market.
Xu’s criticism renews a dispute between executives at two of the cryptocurrency industry’s largest exchanges over the causes of the historic liquidation event, Binance’s responsibility and the effectiveness of its subsequent compensation efforts.
The controversy centers on whether the crash was primarily the result of macroeconomic shocks and excessive market leverage or whether Binance’s promotional campaign involving Ethena’s USDe stablecoin amplified the sell-off.
Binance has rejected claims that its core trading systems caused the market-wide collapse. The exchange has acknowledged platform-specific problems during the extreme volatility and says it compensated affected users and introduced additional safeguards.
Star Xu Says the October 10 Crash Caused Lasting Market Damage
Xu argued that the October 10 collapse was more than an ordinary cryptocurrency market correction. In public comments reported in January 2026, he said tens of billions of dollars in leveraged positions were liquidated and that the event fundamentally changed the crypto market’s structure.
His criticism focused on how traders were encouraged to use USDe, a yield-bearing synthetic dollar issued by Ethena, within leveraged trading strategies.
Xu argued that promotional incentives and the use of USDe as collateral encouraged some traders to underestimate the risks associated with the asset.
Under the strategy he described, traders could exchange conventional stablecoins for USDe, use the resulting holdings as collateral to borrow additional funds, and repeat the process to increase exposure.
Such a structure can magnify gains during favorable market conditions but can also accelerate losses when collateral values fall or liquidity disappears.
Xu said Binance’s position as a major global trading platform carried corresponding responsibilities for the products and incentives it offered customers.
However, these remain Xu’s allegations about the causes and amplification of the crash, rather than a definitive finding that Binance alone caused the market-wide event.
What Happened During the October 10, 2025, Crypto Crash?
The cryptocurrency market experienced an extreme liquidation cascade on October 10, 2025, after U.S. President Donald Trump announced a new escalation in tariffs targeting China.
The announcement intensified risk aversion across financial markets. Crypto prices fell sharply as traders reduced exposure and leveraged positions were forcibly closed.
Market data cited by industry publications indicated that more than $19 billion in leveraged cryptocurrency positions were liquidated over the October 10–11 period.
The forced selling placed additional pressure on prices. As collateral values declined, more positions approached their liquidation thresholds, creating a feedback loop in which falling prices triggered further selling.
Thin order books and reduced liquidity amplified the price movements, while temporary dislocations in certain crypto assets added to the turmoil.
The scale of the event made it one of the largest liquidation episodes in cryptocurrency market history.
Although the market shock began amid broader macroeconomic uncertainty, the debate continues over how exchange-specific products, collateral rules and liquidity conditions contributed to the severity of the losses.
Why Binance’s USDe Promotion Became a Point of Contention
The dispute centers partly on Binance’s promotional campaign involving USDe in September 2025.
The campaign offered a promotional yield of up to 12% annual percentage yield for eligible users during the promotion period. USDe could also be used as collateral in certain trading products.
Xu argued that this combination encouraged traders to treat a yield-bearing synthetic dollar as if it carried the same risk profile as conventional cash-backed stablecoins.
USDe is structurally different from USDT and USDC. Ethena’s product uses a strategy involving crypto assets and offsetting derivatives positions to maintain its dollar value and generate yield. Its risk profile therefore depends on factors such as hedging effectiveness, liquidity, funding conditions and the functioning of the underlying markets.
If traders use an asset with those risks as collateral for additional leveraged positions, a sudden price dislocation can have consequences beyond the original holding.
Xu’s argument is that the product incentives and collateral arrangements helped create conditions in which a market shock could trigger a much larger liquidation cascade.
Binance disputes the suggestion that its products or trading systems were the primary cause of the crash.
Binance’s Response: Macro Shock, Leverage and Liquidity
Binance has maintained that the October 10 event was principally a market-wide risk-off episode intensified by excessive leverage, thinning liquidity and network congestion.
In its January 30, 2026, account of the crash, the exchange said its core matching, risk-check and clearing systems remained operational throughout the market shock.
Binance also acknowledged that some platform-specific incidents occurred, including unusual pricing displays and temporary problems involving certain assets and collateral arrangements.
The exchange argued that most of the liquidation activity occurred before the widely reported depegging of USDe, BNSOL and WBETH on its platform. It cited that sequence as evidence that the broader market shock and forced deleveraging were already underway.
This timing is an important part of Binance’s defense, although it does not by itself resolve every question about how platform-specific conditions may have influenced subsequent trading.
The two sides therefore offer different explanations for the same event: Xu emphasizes the risks created by promotional practices and leverage structures, while Binance emphasizes macroeconomic pressure and a market already vulnerable to cascading liquidations.
How Much Did Binance Pay After the Crash?
Binance announced several forms of financial support after the October 2025 crash. These programs addressed different categories of losses and should not be treated as one undifferentiated compensation payment.
The exchange announced compensation for eligible users affected by specific platform-related incidents involving USDe, BNSOL and WBETH, including qualifying losses and liquidation fees.
Binance subsequently reported that it had credited more than $328 million to eligible users affected by those incidents by October 22, 2025.
Separately, the exchange introduced its $400 million Together Initiative. The program included $300 million in USDC support for qualifying users affected by the market turmoil and a $100 million low-interest loan fund for eligible institutional participants.
| Binance support measure | Announced amount |
|---|---|
| Compensation for eligible platform-specific incidents | More than $328 million credited, according to Binance |
| Together Initiative: eligible user support | $300 million |
| Together Initiative: institutional loans | $100 million |
| Combined announced program amounts | More than $728 million |
The combined figure is more than $728 million when the reported compensation and the full Together Initiative are added together. However, the programs had different eligibility rules and purposes, and the announced loan allocation should not be interpreted as compensation paid directly to traders.
Consequently, descriptions of Binance providing approximately $800 million in post-crash support should be understood as a rounded characterization of multiple measures, not evidence that one $800 million compensation payment was made to all users who lost money in the crash.
Binance also stated that its compensation for eligible platform-specific incidents did not constitute an admission of liability for the wider market collapse.
Why Compensation Does Not Settle the Cause of the Crash
The dispute illustrates the difference between compensating users for specific incidents and accepting responsibility for an entire market event.
An exchange may reimburse eligible customers for pricing errors, collateral depegs or technical problems without agreeing that those problems caused the initial market-wide sell-off.
Likewise, a broader recovery program can provide financial support to traders and institutions without establishing the precise contribution of individual products to the crash.
For Xu, the issue is not simply how much Binance distributed after the event. His criticism concerns the practices that may have increased leverage and exposed customers to risks they did not fully understand.
Binance, by contrast, says the market was already experiencing a severe macroeconomic shock and that its platform-specific issues did not cause the broader collapse.
Resolving the dispute would require a detailed assessment of trading records, liquidation timing, collateral behavior, liquidity across exchanges and the precise effect of individual platform mechanisms.
The Debate Raises Questions About Exchange Risk Management
The October crash has renewed scrutiny of the way cryptocurrency exchanges present yield products, determine collateral eligibility and manage leveraged positions.
High promotional yields can attract users, but they do not eliminate the risks associated with the underlying assets or strategies.
Similarly, allowing an asset to serve as collateral does not make it economically equivalent to cash. If its price or liquidity becomes unstable, users may face liquidation risks even when they believe they hold a dollar-linked instrument.
The event also highlights the importance of clear risk disclosures, robust collateral haircuts, reliable price feeds and safeguards that remain effective during extreme volatility.
For centralized exchanges, these measures matter because the rules governing collateral, leverage and liquidation can affect not only individual customers but also market liquidity when large numbers of positions are closed simultaneously.
What the Dispute Means for the Crypto Industry
The disagreement between Xu and Binance is part of a wider debate about accountability in cryptocurrency markets.
As trading platforms expand their offerings, users increasingly rely on exchanges to explain the risks associated with yield products, collateral arrangements and leveraged trading.
The October 10 event showed how a macroeconomic shock can interact with leverage and thin liquidity to produce losses far larger than the initial price decline might suggest.
It also demonstrated why post-event compensation, while potentially valuable to eligible customers, cannot substitute for transparent explanations of how a market disruption occurred.
The industry may face continued pressure to improve risk disclosures, publish clearer incident reports and distinguish compensation for platform failures from support intended to stabilize markets more broadly.
Bottom Line
OKX founder Star Xu has renewed criticism of Binance’s role in the October 10, 2025, cryptocurrency crash, arguing that promotional practices involving Ethena’s USDe and leveraged collateral arrangements amplified an already severe market shock.
Binance maintains that the collapse was primarily driven by macroeconomic developments, excessive leverage and disappearing liquidity, while acknowledging separate platform-specific incidents and reporting substantial compensation and recovery support.
Binance’s reported compensation and the Together Initiative amounted to more than $728 million in combined announced program amounts, although these included different forms of assistance and were not a single payment for all crash-related losses.
The central question remains unresolved: how much did exchange-specific products and risk controls contribute to the scale of the liquidation cascade? The competing claims underline the need for transparent market data, clear collateral-risk disclosures and stronger safeguards against cascading liquidations.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial or investment advice. Claims about responsibility for the October 2025 crash are attributed to the relevant parties and should not be interpreted as a definitive legal or regulatory finding.
Also Check: USDC Circulation Falls $800 Million in a Week as Circle Redemptions Outpace Issuance
