Nearly four months after crypto’s record Oct. 10 flash crash wiped out leveraged positions across the market, the industry is still arguing about what actually broke.

That argument turned into a public spat on Saturday after OKX founder and CEO Star Xu claimed the crash was neither complicated nor accidental, but the result of irresponsible yield campaigns that pushed traders into leverage loops they did not understand.

On Oct. 10, President Trump’s fresh tariff escalation on China rattled macro markets and hit crypto at the worst moment. With leverage already stacked, the initial drop turned into a wipeout with roughly $19.16 billion in liquidations, including about $16 billion from long bets, as forced selling cascaded across venues.

Star's core point was about USDe, a yield-bearing token issued by Ethena. He described USDe as closer to a tokenized hedge fund strategy than a plain stablecoin. It is designed to generate yield through trading and hedging strategies, then pass that yield back to holders.

"No complexity. No accident. 10/10 was caused by irresponsible marketing campaigns by certain companies. On October 10, tens of billions of dollars were liquidated. As CEO of OKX, we observed clearly that the crypto market’s microstructure fundamentally changed after that day. Many industry participants believe the damage was more severe than the FTX collapse. Since then, there has been extensive discussion about why it happened and how to prevent a recurrence. The root causes are not difficult to identify," Xu said.

Star argued that the risk began when traders were nudged into treating USDe like cash. In his telling, users were encouraged to swap stablecoins into USDe for attractive yields, then use USDe as collateral to borrow more stablecoins, convert those into USDe again, and repeat the cycle. The loop created a self-feeding leverage machine that made yields look safer than they were.

"Binance users were encouraged to convert USDT and USDC into USDe to earn attractive yields, without sufficient emphasis on the underlying risks," he said. "From a user’s perspective, trading with USDe appeared no different from trading with traditional stablecoins—while the actual risk profile was materially higher."

When volatility hit, Star said, that structure would not need a big trigger to unwind. He claimed the cascade helped turn a selloff into a wipeout and left lasting damage across exchanges and users.

"BTC began declining roughly 30 minutes before the USDe depeg. This exactly supports the earlier point: the initial move was a market shock. Absent the USDe leverage loop, the market would likely have stabilized at that point. The cascading liquidations were not inevitable—they were amplified by structural leverage, as explained previously," he said.

Others in the market pushed back on Star's tweets.

Dragonfly partner Haseeb Qureshi called Star’s story “ridiculous,” saying it tries to force a clean villain onto an event that does not fit a simple narrative. He argued the crash did not unfold like a classic stablecoin blowup that spreads everywhere at once.

If a single token failure truly drove the day, he said, the stress would have shown up broadly and in sync across venues.

"USDe price diverged ONLY on Binance, it did not diverge on other venues," he said. "But the liquidation spiral was happening everywhere. So if the USDe "depeg" did not propagate across the market, it can't explain how *every single exchange* saw huge wipeouts."

Qureshi’s alternative explanation is that macro headlines simply spooked an already levered market. Liquidations began as liquidity pulled back fast.

Once that cycle starts, he said, it becomes reflexive. Forced selling drives lower prices, which triggers more forced selling, with few natural buyers willing to step in during chaos.

Earlier in the day, Binance attributed the Oct. 10 flash crash to a macro-driven selloff colliding with heavy leverage and vanishing liquidity, rejecting claims of a core trading-system failure, as CoinDesk reported.