The USDX Stablecoin Faces a Shocking 63% Crash
In a dramatic turn of events, the USDX stablecoin, designed to maintain a $1 peg, plummeted to $0.37 on November 6, losing 63% of its value within hours. The collapse occurred amidst allegations of liquidity drainage involving the coin’s founder, Flex Yang, raising questions about trust and collateral risk in DeFi markets.
What Triggered the Crash?
On-chain investigations revealed that wallets linked to Flex Yang reportedly drained USDC, USD1, and USDT liquidity while using USDX as collateral. This sparked panic across the decentralized finance (DeFi) ecosystem, with traders scrambling to limit their losses. According to crypto analytics platform CoinGecko, USDX briefly hit a low of $0.37 before rebounding to $0.70 within hours.
The Allegations Against USDX Founder
The controversy started on November 5 when a crypto analyst shared findings on social media. The post alleged that USDX-related wallets were borrowing against USDX while incurring 100% interest rates with no plans to repay. The actions involved major DeFi protocols, including Euler, Lista, and Silo, causing widespread concern and speculation about Yang’s intentions.
Community Action: Lista DAO Responds
Lista DAO, a lending protocol affected by the turmoil, confirmed the escalating crisis on November 6. Its governance community swiftly passed emergency proposal LIP022, enabling liquidation proceedings to protect users. Lista worked with affected partners, such as MEV Capital and Re7 Labs, to minimize damage and manage collateral effectively.
As part of damage control, Lista reduced interest rates on USDX/USD1 markets and moved remaining positions into a public liquidation pool. While the situation stabilized slightly, USDX trading volumes soared, reflecting ongoing volatility.
The Implications for DeFi
This depegging incident ranks as one of the most severe stablecoin failures in 2025. It highlights critical flaws in collateral management strategies within decentralized finance. According to a report by Rise, there have been at least nine stablecoin depegging events already this year. However, most resolved within tight margins, unlike USDX’s dramatic collapse.
Where Do We Go From Here?
As of now, Stables Labs, the company behind USDX, has remained silent. The DeFi community continues to await clarity on the allegations, as well as possible recovery plans for users who have been adversely impacted. Transparency, robust governance, and proper collateral management will be essential for restoring trust in the ecosystem.
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