Wintermute CEO Defends Binance After October 10 Crypto Market Crash: What Really Happened?

• Why Did the October 10 Crypto Crash Spark Such Controversy?
• Wintermute’s CEO Challenges the Narrative: Was Binance Really at Fault?
• OKX’s Star Xu Points Finger at Binance’s USDe Incentives
• How Binance Responded to the Allegations
• The Bigger Picture: Crypto’s Perpetual Leverage Problem
• Q&A: Unpacking the October 10 Crypto Crash

The crypto market crash on October 10, 2025, wiped out $19 billion in leveraged positions, sparking fierce debates over Binance's role. Wintermute CEO Evgeny Gaevoy has stepped in to defend the exchange, countering claims from ARK Invest's Cathie Wood and OKX's Star Xu. This article dives into the controversy, analyzing the causes, key players' arguments, and Binance's response—while unpacking the broader implications for crypto market stability.

Why Did the October 10 Crypto Crash Spark Such Controversy?

The crypto market experienced one of its most brutal liquidations on October 10, 2025, with Bitcoin and ethereum prices plunging amid macroeconomic turbulence. What made this event unique wasn’t just the $19 billion wipeout—it was the finger-pointing that followed. ARK Invest’s Cathie Wood blamed a "software glitch" on Binance, while OKX CEO Star Xu accused the exchange of enabling reckless leverage through its USDe stablecoin promotions. But Wintermute’s Evgeny Gaevoy fired back, calling these claims oversimplified. "This was a perfect storm of macro news hitting an overleveraged market during low-liquidity hours," he argued on X (formerly Twitter). The truth, as always in crypto, seems to lie somewhere in the middle.

Wintermute’s CEO Challenges the Narrative: Was Binance Really at Fault?

Evgeny Gaevoy didn’t hold back in his defense of Binance. The algorithmic trading firm founder criticized public figures for "careless wording," particularly Cathie Wood’s software failure theory. Data from TradingView shows the crash coincided with Donald Trump’s announcement of proposed 100% tariffs on Chinese imports—a macro bombshell that rattled all risk assets. Gaevoy emphasized that Binance’s infrastructure remained operational, though interface errors (like temporary zero-balance displays) fueled panic. "Friday night, thin liquidity, extreme leverage—that’s the recipe here," he wrote. Binance later confirmed paying $328 million in user compensations, exceeding their initial $283 million pledge.

OKX’s Star Xu Points Finger at Binance’s USDe Incentives

OKX’s CEO presented a damning case: Binance’s 12% APY campaign for USDe—a "tokenized hedge fund" stablecoin—allegedly created a dangerous leverage loop. Users converted USDT/USDC to USDe, used it as collateral to borrow more USDT, then repeated the cycle. Xu claimed this spawned artificial APYs up to 70%, with cascading liquidations when USDe lost its peg (plummeting to $0.65 on Binance versus $1 elsewhere). "Risk management failures around WETH and BNSOL amplified the crash," he added. While Xu framed his comments as necessary truth-telling, Binance co-founder Yi He retorted that "whales know what really happens when tides retreat," implying market dynamics—not exchange flaws—drove the collapse.

How Binance Responded to the Allegations

Binance’s January 30 statement pinned the crash on three factors: macroeconomic shocks, Ethereum network congestion, and market maker risk protocols. They highlighted that trading engines stayed online despite UI glitches. Interestingly, the exchange didn’t directly address USDe’s role but noted stablecoin volatility during the sell-off. A BTCC analyst observed, "This was a liquidity crisis first, an exchange controversy second." Data from CoinMarketCap confirms USDe has since regained its dollar peg, though trust in synthetic stablecoins took a hit.

The Bigger Picture: Crypto’s Perpetual Leverage Problem

Beyond the blame game, October 10 exposed crypto’s addiction to leverage. The 24-36% APY schemes Xu described weren’t magic—they were debt-fueled time bombs. As one trader joked, "The only thing faster than crypto gains is crypto losses." While Binance bore the brunt of criticism, other exchanges like BTCC and OKX also saw liquidations. The takeaway? Markets with 100x leverage will always be vulnerable to black swans. Perhaps Gaevoy put it best: "Public figures should choose words carefully—misdiagnosing causes prevents real solutions."