Wintermute CEO defends Binance over October 10 crypto market crash

Evgeny Gaevoy, founder of Wintermute, the global algorithmic trading firm, made comments challenging ARK Invest CEO Cathie Wood, OKX CEO Star Xu, and other industry players’ claims that Binance’s actions triggered the October 10 meltdown that wiped out around $19 billion in leveraged positions. 

The controversy involving cryptocurrency exchanges over last October’s market crash has taken another turn, with Wintermute’s CEO defending Binance against allegations that it caused the worst liquidation event in crypto history.

He wrote, “Kind of wish public figures would pick words more carefully.”

Gaevoy did not agree with the submission that the event occurred due to a “software glitch.”

“It was a flash crash on a mega leveraged market on illiquid Friday night driven by macro news,” Gaevoy wrote.

What did Star Xu say about the October 10 crash?

OKX CEO accused Binance of encouraging users to convert stablecoins into USDe, which he described as a “tokenized hedge fund,” and allowing it to be used as collateral without adequate risk warnings.

Xu wrote, “Binance launched a temporary user-acquisition campaign offering 12% APY on USDe, while allowing USDe to be used as collateral with the same treatment as USDT and USDC, and without effective limits.”

According to him, the risks escalated as more users converted USDT/USDC into USDe and used USDe as collateral to borrow USDT. The borrowed USDT is then converted back into USDe, and the cycle is repeated.

He stated that users created leverage loops that produced artificial annual percentage yields (APYs) of 24% and 36%, at some point exceeding 70%, accumulating systemic risk across global markets.

“When volatility hit, USDe depegged quickly. Cascading liquidations followed, and weaknesses in risk management around assets such as WETH and BNSOL further amplified the crash. Some tokens briefly traded near zero,” Xu wrote, referencing the loss of 1:1 peg that occurred in the heat of the crash.

Xu claims that the damage from the crash to users and companies, including OKX, was more severe, adding that recovery will take time.

The OKX CEO stated that speaking “openly about systemic risks is sometimes uncomfortable, but it is necessary if the industry is to mature responsibly,” and he stated that he will continue to do so.

He added that his company, OKX, may face significant misinformation attacks and coordinated FUD in the near future as a result of his post.

Binance rejects claims that it was behind the market crash

Binance co-founder Yi He responded on X, writing, “Whales who trade on Binance know better what actually happens when the tide goes out.”

In a now-deleted post, she also suggested that Wood, who recently linked the crash to a Binance software glitch in a Fox Business interview, was not qualified to comment as a non-user of the platform. Wood stated that the leveraging event removed roughly $28 billion from the market.

Many people point to President Trump’s announcement of his plans to impose 100% tariffs on Chinese imports as the catalyst for the October 10 crash.

Bitcoin and Ethereum prices dipped significantly and set off a chain reaction of panic trading activities.

USDe depegged on Binance, trading at $0.65 on Binance. Although the synthetic stablecoin traded closer to $1 on other exchanges.

On January 30, Binance issued its most detailed statement yet on the matter, pinning the link to the post on its X account.

The exchange attributed the crash to macro shocks, market maker risk protocols, and Ethereum network congestion. Binance stated that its core infrastructure was operational throughout and that interface display errors, one of which showed some balances as “zero,” did not affect actual trade execution.

Binance has completed $328 million in compensation to affected users, expanding an initial $283 million payout announced within 24 hours of the crash.

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