OKX CEO Blames Binance-linked USDe Yield Loop for Oct. 10 Flash Crash
OKX founder and CEO Star Xu publicly blamed Ethena’s yield-bearing stablecoin USDe and Binance-promoted yield campaigns for amplifying the Oct. 10 flash crash that produced roughly $19.16 billion in liquidations (about $16 billion from long positions). Xu says traders treated USDe like cash—swapping stablecoins into USDe, using it as collateral, borrowing against it and repeating the cycle—creating a leveraged feedback loop that turned an initial BTC selloff into a cascading liquidation spiral. He noted Bitcoin began falling about 30 minutes before USDe’s divergence and argued the embedded leverage around USDe worsened the downturn and prevented market stabilization. Critics including Dragonfly partner Haseeb Qureshi and Binance reject a single-token explanation. Qureshi said USDe’s price divergence appeared mainly on Binance and did not synchronise across venues, arguing the liquidation cascade reflects broad macro-driven selling, heavy leverage and evaporating liquidity rather than a venue-specific USDe depeg. Binance similarly attributed the event to an overleveraged market and liquidity withdrawal. Key takeaways for traders: the episode highlights risks from yield-bearing stablecoins and leveraged yield strategies, cross-venue liquidity fragility, and how marketing-driven “leverage loops” can amplify macro shocks. Primary keywords: USDe, Ethena, Binance, OKX, Oct. 10 flash crash, liquidations, leverage loop.
Bearish
This news is likely bearish for BTC and the broader market in the short to medium term. The claim that USDe-related leverage loops amplified the Oct. 10 crash highlights persistent systemic vulnerabilities: marketing-driven yield campaigns, yield-bearing stablecoins used as pseudo-cash, high counterparty and collateral concentration, and cross-venue liquidity fragility. Those factors increase tail-risk and the likelihood of sudden, deep sell-offs when macro headlines or large BTC moves occur. Triggers for renewed selling include forced deleveraging, cross-margin calls and venue-specific price divergences that propagate through liquidation engines. Over the longer term, the episode may spur tighter risk controls, changes in product design (less leverage-friendly yield mechanics), and greater scrutiny of yield-bearing stablecoins—actions that could improve structural resilience but also temporarily reduce liquidity and yield-seeking activity. For traders: expect elevated volatility, wider funding/spread dislocations, and increased sensitivity to on-chain and off-chain liquidity metrics; risk management (position size, margin buffers, and cross-exchange monitoring) should be prioritised.