October Crypto Flash Crash: Market Dynamics Revealed

3 mins mins

Key Points:

OKX CEO Star Xu blames Binance’s USDe campaign for October crash.
Damage surpassed FTX with $19B liquidations in one day.
Major market assets like BTC, ETH had drastic declines.

OKX CEO Star Xu attributed the October 10, 2025, cryptocurrency flash crash to Binance’s USDe marketing tactics, significantly impacting the market’s microstructure with lasting damage surpassing the FTX collapse.

This incident highlights systemic vulnerabilities in crypto marketplaces, raising concerns about marketing practices and risk management, as asset values plummeted alongside user trust, demanding urgent industry reassessment.

Binance’s Role in October’s $19B Market Meltdown

In a deliberate post on the X platform, OKX CEO Star Xu accused Binance of irresponsible marketing that allegedly triggered the October 10th flash crash. Criticism centered on Binance’s USDe promotion, where users exploited high yields, leading to significant systemic risks.

As a consequence, USDe initially depegged by 35% on Binance, with affected assets, including BTC and ETH, experiencing sharp declines. The crash not only led to prolonged disruption in market pricing but also highlighted fragility in collateral management practices.

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Industry leaders reacted swiftly. Star Xu’s call for better risk management was echoed across platforms, with Binance dismissing claims as a “coordinated attack.” Changpeng Zhao (CZ) defended Binance, highlighting technical volatility issues. Industry observers viewed this as part of a larger trust deficit in centralized exchanges.

Long-Term Effects and Future of Crypto Exchanges

Did you know? Despite the market rebound following the COVID-era setback, the October 10 flash crash resulted in a one-day liquidation loss surpassing the infamous FTX collapse, then deemed the largest in crypto’s history.

As of January 31, 2026, Bitcoin (BTC) is priced at $83,811.51, with a market cap of approximately $1.67 trillion. BTC’s market dominance stands at 59.07%, and 24-hour trading volume registered at $63.53 billion. Recent performance: 2.13% up over 24 hours, yet down 6.38% over 7 days. (Data source: CoinMarketCap)

bitcoin-daily-chart-5991 — Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 02:09 UTC on January 31, 2026. *Source: CoinMarketCap*

The Coincu research team suggests this crash may propel shifts toward decentralized finance, though regulatory scrutiny on stablecoin collateralization is expected. The call for enhanced security protocols and increased transparency could drive the future of crypto exchanges and their operations.

“People have underestimated the impact of 10/10. The incident caused real and lasting damage to the industry. An industry-leading company should focus on strengthening core infrastructure, building trust with global users and regulators, and protecting the long-term interests of the majority of crypto users, setting an example for others to follow.” — Star Xu, Founder and CEO, OKX.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.