On Oct. 10, 2026, a flash crash in Bitcoin wiped out heavily leveraged positions across exchanges, producing roughly $19.16 billion in liquidations, including about $16 billion from long bets. OKX founder Star Xu publicly attributed the wipeout to yield campaigns around USDe, saying those promotions nudged traders into repeated borrowing and conversion cycles that stacked hidden leverage.
The October 2026 Bitcoin Crash and Its Triggers
The initial market drop coincided with a fresh tariff escalation on China, which spooked broader macro markets and arrived when leverage was already high. With leverage already stacked, forced selling cascaded across venues and turned the initial move into a widespread wipeout. The scale of liquidations—roughly $19.16 billion—reflects how quickly liquidity vanished once the cycle began.
OKX Founder's Accusations Against Binance
Star Xu focused his criticism on USDe, an Ethena-issued, yield-bearing token that he described as closer to a tokenized hedge-fund strategy than a plain stablecoin. According to his account, users were encouraged to convert stablecoins into USDe for attractive yields and then use USDe as collateral to borrow more stablecoins, repeating the cycle and creating a self-reinforcing leverage loop.
Xu argued that these yield campaigns made USDe look like cash to many traders, masking a materially higher risk profile that could unwind quickly under volatility. For more on the risks Xu highlighted, see Star Xu's wallet risks in our related coverage.
Counterarguments and Market Analysis
Not everyone agreed that a single token campaign caused the crash. Dragonfly partner Haseeb Qureshi called the idea of a single villain “ridiculous,” arguing the episode looks like a macro-driven selloff that met an already levered market. He emphasised that liquidations happened across the industry, which points to a broader, systemic squeeze rather than a failure isolated to one venue.
Qureshi also noted that USDe's price divergence occurred only on Binance while the liquidation spiral unfolded universally, suggesting that a Binance-specific divergence cannot fully explain wipeouts on every exchange. Binance itself told reporters the flash crash reflected a macro-driven selloff colliding with heavy leverage and vanishing liquidity, rather than a core trading-system failure; that response is discussed further in Binance's denial.
Impact on Exchanges and User Behavior
The dispute has left lingering questions about how yield-bearing products are marketed and used as collateral across platforms. Xu warned that promoting token yields without clear emphasis on structural risks can leave users exposed to leverage that becomes visible only during stress.
Whether the primary cause was token-specific campaigns or macro-driven reflexive selling, the episode is likely to affect trust in leveraged yield strategies and push users to reassess how they treat non-traditional stable assets in trading and borrowing setups.
Why this matters
For a miner operating in Russia with between one and a thousand devices, this debate matters because market-wide liquidations reduce liquidity and increase volatility, which can influence when you choose to sell mined coins or hedge exposure. Even if the crash stemmed from macro headlines, the amplification via leverage shows how interconnected trading products can affect prices across exchanges.
Understanding whether a product behaves like cash or carries hidden strategy risk helps you decide how readily to accept such tokens as collateral or to use them in yield stacks that fund operations and electricity costs.
What to do?
- Check your short-term cash needs: avoid locking large portions of proceeds into yield products if you may need liquidity quickly.
- Prefer plain stablecoins for operational reserves: treat yield-bearing tokens as higher-risk instruments and limit their share of your collateral or reserves.
- Limit leverage exposure: if you use borrowing to smooth costs, keep safety margins that account for rapid price moves and vanishing liquidity.
- Monitor venue-specific behavior: price divergences can be isolated to one exchange, so track prices across platforms before acting on an apparent depeg.
- Follow official exchange statements and post-mortems, but maintain your own risk rules that prioritize uptime and covering power bills.
