In a striking accusation, Star Xu, founder of OKX, attributed Bitcoin's catastrophic crash on October 10 to Binance's reckless yield campaigns. Nearly four months post-crash, the crypto sector remains embroiled in debates about the underlying causes of this market upheaval. Xu asserted that the crash was neither intricate nor accidental but stemmed from irresponsible marketing strategies that misled traders into dangerous leverage loops.

On October 10, macroeconomic factors, including President Trump’s tariff escalation on China, rattled markets at a particularly vulnerable time for crypto. The initial downturn cascaded into a massive liquidation event, wiping out approximately $19.16 billion in leveraged positions. Xu's comments highlighted USDe, a yield-bearing token from Ethena, which he claimed functioned more like a tokenized hedge fund than a standard stablecoin. This token was designed to yield returns via trading and hedging strategies, leaving users unaware of the risks involved.

Xu criticized the practice of encouraging users to convert stablecoins like USDT and USDC into USDe for attractive yields, emphasizing that this led to an illusion of safety. When volatility struck, the leverage loops unwound rapidly, exacerbating the selloff. He maintained that the Bitcoin decline began just before the USDe depeg, suggesting that absent the leverage loops, the market might have stabilized sooner.

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However, not everyone agrees with Xu's perspective. Haseeb Qureshi of Dragonfly dismissed Xu's narrative as overly simplistic, arguing that the crash didn’t conform to a traditional stablecoin failure pattern. He pointed out that USDe's price diverged solely on Binance, while liquidations were widespread across other exchanges. Qureshi contended that the crash was primarily fueled by macroeconomic stress rather than a singular token failure.

Earlier, Binance had attributed the October 10 flash crash to a macro-driven selloff combined with excessive leverage and dwindling liquidity, rejecting any claims of a fundamental trading system failure, as noted by CoinDesk. The ongoing dispute between exchange leaders showcases the broader confusion in the market regarding the true causes of the October crash.

As the crypto world grapples with the fallout from the crash, the implications for market stability and trader education are profound. Understanding the complexities of leveraged trading and yield-bearing tokens like USDe is crucial for preventing future disasters. The debate illustrates the need for clearer communication about risks in crypto trading, especially as new financial instruments gain traction. Without addressing these issues, the market may face similar turmoil in the future.