OKX CEO Star Xu has accused Binance of fueling the October 10 disaster that erased almost $19 billion from crypto markets.
Xu alleges that the turmoil was pushed by Binance’s aggressive advertising and marketing of Ethena’s USDe artificial greenback.
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OKX CEO Slams Binance’s ‘Irresponsible’ USDe Advertising and marketing
In a January 31 publish on X (previously Twitter), Xu claimed that the market crash was not a random accident of complexity however a foreseeable failure of danger administration.
“No complexity. No accident. 10/10 was brought on by irresponsible advertising and marketing campaigns by sure corporations,” he said.
Xu claimed that the Binance user-acquisition marketing campaign for Ethena’s artificial greenback, USDe, inspired extreme leverage. He argued that this created a systemic fragility that collapsed beneath market stress.
Based on the OKX chief govt, Binance provided a 12% annual yield on USDe. This allowed customers to collateralize the asset on phrases similar to these of conventional stablecoins comparable to USDT and USDC.
Xu argued that this created a “leveraged loop” through which merchants transformed customary stablecoins into USDe to farm yield. He claimed this exercise artificially inflated the token’s perceived APY to charges as excessive as 70%.
“This marketing campaign allowed customers to leverage USDe as collateral with the identical remedy as USDT and USDC with out efficient limits,” Xu wrote.
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Not like conventional stablecoins backed by money equivalents, USDe employs a delta-neutral hedging technique that Xu described as carrying “hedge-fund-level structural dangers.”
When volatility struck on October 10, Xu asserts that this leverage unwound violently. The ensuing depeg of USDe triggered a cascade of liquidations that danger engines couldn’t comprise, significantly affecting belongings like WETH and BNSOL.
Based on him, some tokens briefly traded at near-zero ranges, and USDe’s “synthetic” stability masked the buildup of systemic danger till it was too late.
“As the biggest international platform, Binance has outsized affect—and corresponding accountability—as an trade chief. Lengthy-term belief in crypto can’t be constructed on short-term yield video games, extreme leverage, or advertising and marketing practices that obscure danger,” Xu concluded
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Binance, Ethena Rebut OKX’s Principle
Nonetheless, main trade stakeholders have forcefully rejected Xu’s narrative, citing transaction information that contradicts his timeline.
Haseeb Qureshi, managing associate at Dragonfly, argued that Xu’s idea fails to account for the order of occasions. Based on Qureshi, Bitcoin’s worth bottomed a full half-hour earlier than the USDe deviated from its peg on Binance.
“USDe clearly can’t have prompted the liquidation cascade,” Qureshi said, calling the accusations a misplacement of trigger and impact.
He additional famous that the USDe depeg was an remoted occasion on Binance’s order e book, whereas the liquidation spiral was market-wide.
“If the USDe ‘depeg’ didn’t propagate throughout the market, it may well’t clarify how each single change noticed big wipeouts,” Qureshi added.
Ethena Labs founder Man Younger additionally disputed Xu’s claims. He cited order-book information that proves that the USDe’s worth discrepancy occurred solely after the broader market had already crashed.
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Binance, in the meantime, maintained that the problem stemmed from a “liquidity vacuum” somewhat than its product choices.
The change launched information indicating that Bitcoin liquidity was “zero or close to zero” throughout most main venues in the course of the crash. This skinny market created a state of affairs through which mechanical promoting drove costs down disproportionately.
The change additionally denied any systemic manipulation, attributing the chaotic worth motion to market makers pulling stock in response to excessive volatility and API latency.
Nonetheless, this battle highlights the intensifying blame sport between prime crypto exchanges as they face continued scrutiny over the structural fragility revealed in the course of the October 10 incident.