Did Binance cause the crash on October 10, 2025?

Four months following the alarming flash crash on October 10, 2025, when around $19.16 billion was obliterated, a heated debate has emerged concerning the triggering factors behind the market collapse. Industry experts have presented differing opinions about whether the crash resulted from intrinsic issues with specific products or more widespread market forces.

CEO of OKX, Star Xu, placed the blame on leverage loops brought about by misguided marketing strategies. In a series of tweets, Xu criticized the promotion of USDe, a yield-bearing token from Ethena, as a stablecoin without sufficient clarification on the associated risks. He pointed fingers at Binance, arguing that the exchange encouraged users to swap stablecoins for USDe to earn high yields, creating a leverage loop that falsely portrayed returns as secure.

However, Binance refuted these allegations, attributing the flash crash to a macroeconomic shock that intertwined with excessive leverage and diminishing liquidity. The trading giant released a detailed report dismissing claims of infrastructural failures within their systems as instigators of the crash. Binance insisted that global markets were already under pressure due to new tariffs imposed by President Trump on China, resulting in a frenzy of heightened trading activity in Bitcoin and Ether futures and options leading up to October.

Acknowledging two hiccups within their platform during the crash, Binance clarified that neither incident was responsible for the broader market turmoil. Instead, they emphasized the initial macroeconomic shock as the primary catalyst for the cascade of liquidations that ensued. Liquidity constraints exacerbated by market makers withdrawing from order books exacerbated the situation, underscoring the self-reinforcing cycle of selling pressure that gripped the market.

Criticism of Xu’s single-actor theory emerged from Haseeb Qureshi, a partner at Dragonfly, who denounced it as simplistic and unconvincing. Qureshi argued that the derivative price discrepancy extending to USDe on Binance alone, not replicated across other exchanges, indicated a different narrative at play. He posited that broader macroeconomic uncertainties spooked an already hypersensitive and leveraged market, leading to mass liquidations and a subsequent liquidity drought.

Additionally, personal animosity between industry executives was brought into the spotlight during the debate. CZ, the ex-CEO of Binance, pointed out Dragonfly’s vested interest in rival exchange OKX, igniting a public spat with Xu refuting the claims. This personal rift underscored the intense scrutiny and intricate dynamics within the crypto community as it struggled to find a unifying explanation for the catastrophic events of October 10, 2025.

In conclusion, the fallout from the October 10 crash continues to roil the crypto industry, with competing narratives and unresolved questions plaguing market participants months after the unprecedented liquidation event. The lack of consensus on the root causes and consequences of the crash underscores the complex interplay of market forces, liquidity concerns, leverage risks, and misleading marketing tactics that have shaped the post-crash landscape of the crypto market.