This is a fairly sensationalist article. Misaligned incentives and poor risk management cause crashes, not formulas and models.

Every option trader I've ever met is 100% aware of the limitations of Black-Scholes and are not using it blindly to price options/complex derivatives.

Black-Scholes assumes returns are lognormally distributed. The market knows this not to be true and you can back out this fact from option prices. Inputs such as kurtosis and skew are used to determine a more accurate representation of returns.