Tom Lee Blames Stablecoin Pricing Error on Binance for October Crypto Market Crash

In a CNBC interview on November 21, Fundstrat Global Advisors Research Director Tom Lee revealed that a catastrophic market downturn in October 2025 was triggered by a stablecoin pricing glitch on a major exchange, identified as Binance.

The stablecoin USDe, issued by Ethena Labs, abruptly dropped to $0.65 due to an internal pricing error and lack of liquidity, which instantly activated the exchange's Auto-Deleverage (ADL) mechanism. This led to the forced liquidation of approximately 2 million accounts within minutes, wiping out traders and margin positions.

Lee described a chain reaction where each liquidation added selling pressure, causing further liquidations across interconnected markets. The event, occurring around October 10, was a structural failure rather than a traditional panic, with market makers—referred to as the crypto ecosystem's 'central bank'—forced to rapidly pull back liquidity to cover balance sheet gaps.

This retrenchment weakened market depth across the entire crypto ecosystem, leading to sustained stress, spiked volatility, and a prolonged tailspin for Bitcoin and other major assets throughout late October and early November. Lee emphasized that the combination of automated systems, flawed pricing logic, and insufficient circuit breakers made the event uniquely destructive, highlighting critical lessons for digital asset infrastructure.