Rich by Coin

OKX CEO Star Xu attributed the cryptocurrency market downturn to a Binance marketing mistake on October 10, describing it as not an accident but the result of irresponsible marketing. He said a high-yield campaign launched by Binance helped drive the sharp drop, and tens of billions of dollars in liquidations followed as the market’s micro-structure changed. Xu warned that many participants believe the damage could be worse than the FTX crash. He identified a temporary Binance user-acquisition campaign as the root cause.

Xu explained that Binance offered a 12% APY for USDe, allowed USDe to be used with the same collateral status as USDT and USDC, and imposed no effective limits. Users were incentivized to convert their USDT and USDC assets to USDe to achieve high returns. He described USDe as structurally different from classic stablecoins, calling it a tokenized hedge fund product run by Ethereum and based on arbitrage and algorithmic strategies. By contrast, he said tokenized money-market funds like BlackRock’s BUIDL or Franklin Templeton’s BENJI carry lower risk, while USDe carries hedge-fund-level risk.

According to Xu, the risk intensified as users cycled through converting USDT/USDC to USDe, borrowing USDT with USDe as collateral, and converting back. This mechanism artificially created APY rates of 24%, 36%, and even over 70%. Xu argued that because these returns were offered by a large platform, they were perceived as low-risk, but systemic risk accumulated rapidly. USDe quickly lost its peg when market volatility rose, triggering chain liquidations and causing some tokens to trade at near-zero prices briefly.

Star Xu clarified that his remarks were not an attack on Binance but a discussion of systemic risks, while noting that Binance’s size imposes greater industry responsibility. He argued that long-term trust in the crypto sector cannot be built on short-term high-return games, excessive leverage, or marketing practices that lack transparency regarding risks. He warned of misinformation and coordinated FUD campaigns targeting OKX, but said the industry must acknowledge systemic risks and pursue more transparent, responsible practices.