The Blame Game: Web3 Titans Clash Over Causes of 2025's 'Black Friday' Crypto Crash
The October 10, 2025, flash crash—dubbed 'Crypto's Black Friday'—was more than a brutal market correction. It was a stress test that exposed the fragile scaffolding of leverage and liquidity underpinning the digital asset ecosystem. Now, months later, the hunt for a culprit has escalated into a public feud among the sector's most prominent leaders, turning a market event into a referendum on the industry's risk culture.
The event unfolded with stunning speed. Within hours, an estimated $19 to $28 billion in leveraged positions was forcibly liquidated. On the Binance exchange, the price of the synthetic dollar token USDe briefly dislocated, trading as low as $0.65 against its $1 peg, contributing to a multi-billion dollar contraction on the venue. While markets eventually stabilized, the question of 'why' has proven far more volatile.
The first major salvo came from ARK Invest's Cathie Wood. In a January 2026 television appearance, she pointedly linked the crash to a "Binance software-related issue," suggesting the forced selling from this glitch was the primary driver. Her comments, intended as market analysis, were widely interpreted as placing blame squarely on the world's largest exchange.
That narrative was swiftly challenged. Evgeny Gaevoy, founder of market maker Wintermute, framed the crash as a macro-driven event amplified by record-high leverage and automated risk systems. "Finding a scapegoat is comfy, but blaming this on one exchange is intellectually dishonest," Gaevoy argued, emphasizing a perfect storm of thin liquidity and synchronized deleveraging across multiple platforms.
The debate reached a new intensity when OKX CEO Star Xu entered the fray. In a detailed social media post, he dismissed notions of complexity or accident. "The crash was triggered by irresponsible yield marketing and leverage incentives," Xu asserted. He singled out a temporary Binance campaign offering 12% APY on USDe—a token he characterized not as a traditional stablecoin but as a tokenized hedge fund product from Ethena Labs—which was then used as high-risk collateral. "This embeds hedge-fund-level risk into the heart of the leverage system," Xu warned.
Binance, and its former CEO Changpeng 'CZ' Zhao, fired back. CZ suggested competitive motivations, noting OKX's investor ties. Binance later published its official post-mortem, attributing the crash to a macro 'risk-off' shock fueled by geopolitical tensions and record derivatives exposure. The exchange acknowledged temporary price deviations for several tokens but argued that 75% of liquidations occurred beforehand, indicating a broader market collapse was already in motion. It highlighted a $328 million user compensation program and new safeguards.
Industry Voices React:
Marcus Chen, Portfolio Manager at Apex Digital Assets: "This public finger-pointing is counterproductive. The data shows a confluence of factors: excessive systemic leverage, concentrated liquidity, and yes, likely some venue-specific issues. The industry needs unified stress testing standards, not a blame circus."
Anya Petrova, DeFi Research Lead at ChainSight: "Star Xu has a point about the mis-marketing of risk. New users saw '12% APY' and 'stablecoin' in the same sentence and didn't understand the underlying mechanics. This is a massive failure in risk communication that regulators will seize upon."
David Riggs, independent trader and commentator: "It's utterly farcical. The CEOs pointing fingers are the same architects of this hyper-leveraged casino! Binance's high-yield promo, OKX's own leverage products—they all fed the beast. Now they're shocked it bit them? This isn't analysis; it's reputation laundering."
Dr. Lena Schmidt, Financial Technology Professor at Stanford: "The core issue is the recursive nature of modern crypto leverage. Assets like USDe are created from derivatives, then re-hypothecated as collateral for more leverage. When volatility hits, the entire stack unravels simultaneously. Assigning blame to one node misses the structural flaw."
Ultimately, the 10/10 crash has evolved from a market shock to a defining controversy. The unresolved debate among its leaders highlights a critical crossroads for Web3: whether it will address its intertwined risk vectors holistically or remain fragmented, awaiting the next inevitable stress test.