The crypto industry remains deeply divided over the root cause of the 1011 crash — one of the most violent market events since FTX. A public clash between OKX founder Star, Dragonfly partner Haseeb Qureshi, Binance's CZ, and Ethena founder Guy Young has reopened questions around leverage, exchange responsibility, and systemic risk.
What Was the 1011 Crypto Crash?
On October 11, extreme volatility and cascading liquidations wiped out billions in leveraged positions on major exchanges. Many insiders argue its impact rivaled — or even exceeded — the FTX collapse in terms of market structure damage. Despite months of analysis, no single explanation has achieved industry-wide consensus.
Star's Claim: Binance's USDe Campaign as the Trigger
On January 31, OKX founder and CEO Star posted that Binance played a central role in the crash related to the management of USDe, a yield-generating stablecoin by Ethena. Star claimed Binance promoted USDe with temporary incentives of around 12% APY and treated it as collateral alongside USDT and USDC. Unlike conventional stablecoins, USDe is a tokenized hedge-fund-like strategy — inherently riskier. Users were implicitly invited into a leveraged loop: convert USDT/USDC to USDe, borrow USDT against USDe, rebuy USDe, and repeat. This cycle created concealed systemic leverage, making the market fragile. When volatility struck, USDe briefly de-pegged, triggering liquidation cascades that worsened the crash. Star stressed this was not an attack on Binance but a call for industry giants to consider how product design affects global market stability.
Dragonfly Breaks the Narrative
Haseeb Qureshi, a partner at Dragonfly, vehemently denied Star's story, calling it inconsistent with market data. He noted that BTC bottomed 30 minutes before USDe de-pegged, reversing cause and effect. The USDe price deviation was seen only on Binance, but liquidations occurred worldwide. Real systemic collapses (Terra, FTX, 3AC) permeated all exchanges; this one did not. Haseeb also questioned why Star raised the issue months later, given order book data had been public.
Alternative Explanation: Panic, API Failure, and Market Structure Breakdown
Haseeb proposed a more data-consistent explanation: panic selling caused by Trump's tariff threats; 24/7 trading amplified crypto declines; Binance's API crashed at peak volatility, preventing market makers from redistributing inventory across exchanges; auto-deleveraging (ADL) systems worsened liquidations; with no buyer of last resort, altcoins collapsed rapidly. Unlike traditional markets, crypto liquidation systems lack self-stabilization, making crashes path-dependent and harder to contain.
CZ, Ethena Founder, and Conflict of Interest
Binance founder CZ publicly agreed with Haseeb's timeline argument but later deleted his tweet. Ethena founder Guy Young also attacked Star, stating USDe price differences occurred after the loss. Notably, Dragonfly invested in Ethena; both Binance and OKX were Ethena partners; OKX was an early investor in Dragonfly funds. Haseeb emphasized this was about precision, not loyalty.
Final Take: No Single Cause
There is still no single, simple explanation for the 1011 crash. The evidence suggests a convergence of panic, leverage, technical failures, and fragile market design rather than one actor alone.