Evgeny GayvoyfoThe companies, part of the global algorithmic trading firm Wintermute, issued a statement disputing claims by ARK Invest CEO Cathie Wood, OKX CEO Star Xu, and other industry players that Binance's actions caused the Oct. 10 meltdown, wiping out around $19 billion in leveraged positions.
The controversy surrounding crypto exchanges over last October's market crash has taken a new turn, with Wintermute's CEO defending Binance against allegations that it was responsible for the worst liquidation incident in crypto history.
he wrote, “Kindness I wish a public figure would take my photo.k wheremore be careful.”
Gaevoy disagreed that the incident was caused by a “software glitch.”
“This was a flash crash that occurred on Friday night in a huge leveraged market that became illiquid due to macro news,” Gaboy wrote.
What did Star Shu say about the October 10th crash?
OKX CEO accused Binance of encouraging users to convert stablecoins to stablecoins $USDeHe described it as a “tokenized hedge fund” that allowed it to be used as collateral without proper risk warnings.
Mr. Xu wrote: “Binance has launched a temporary user acquisition campaign offering 12% APY $USDewhile allowing $USDe be used as collateral for the same treatment as $USDT and $USDCand there are no practical limitations. ”
He said the risk increased as more users converted. $USDT/$USDC into the $USDe and was used $USDe as collateral for borrowing $USDT. something borrowed $USDT Then it will be converted again $USDethis cycle repeats.
He said users created leverage loops that produced artificial annual percentage yields (APYs) of 24% and 36%, and at one point over 70%, accumulating systemic risk across global markets.
“When volatility increases, $USDe I was immediately unpegged. A series of liquidations followed, and weaknesses in risk management surrounding assets such as WETH and BNSOL further amplified the collapse. “Some tokens briefly traded near zero,” Xu wrote, referring to the loss of the 1:1 peg during the crash.
Xu added that the damage caused by the crash to users and companies, including OKX, is even more severe and will take time to recover.
“Talking publicly about systemic risk is sometimes uncomfortable, but it is necessary for the industry to mature responsibly,” OKX's CEO said, adding that the company will continue to do so.
He added that his company, OKX, could face significant misinformation attacks and coordinated FUD in the near future as a result of his posts.
Binance denies claims that Binance was behind the market crash
Binance co-founder Yi He wrote in X that “the whales that trade on Binance know very well what actually happens when the tide goes out.
In a now-deleted post, she also suggested that Wood, who recently linked the crash to Binance's software glitch in an interview on Fox Business, is not qualified to comment as a non-user of the platform. Wood said the leverage event took about $28 billion out of the market.
Many people point to President Trump's announcement of plans to impose 100% tariffs on imports from China as the trigger for the October 10 crash.
Bitcoin and Ethereum prices fell significantly, causing a chain reaction of panic trading activity.
$USDe It has been unpegged on Binance and is trading at $0.65 on Binance. Although the synthetic stablecoin was trading close to $1 on other exchanges.
On January 30th, Binance issued its most detailed statement yet on the matter, pinning a link to the post on its X account.
The exchange attributed the crash to macro shocks, market maker risk protocols, and congestion on the Ethereum network. Binance stated that its core infrastructure was fully operational and that one of the interface display errors did not affect actual trade execution, with some balances showing as “zero.”
Binance has completed $328 million in compensation to affected users, expanding on the initial $283 million payout announced within 24 hours of the crash.
