BlockBeats News, January 31st, OKX founder Star stated in a social media post that the market crash on October 10th was caused by irresponsible marketing activities of certain companies, without a complex reason, and certainly not by chance.
On October 10th, hundreds of billions of dollars in funds were liquidated. As the CEO of OKX, we clearly observed that since that day, the microstructure of the cryptocurrency market has undergone a fundamental change. Many industry participants believe that the damage caused by this event is more severe than the FTX collapse. Subsequently, extensive discussions have taken place in the market regarding the cause of the incident and how to prevent a recurrence. The root of the problem is not difficult to trace. Here is what originally happened:
· Binance launched a temporary user acquisition activity, offering up to a 12% annualized yield for USDe, while allowing USDe to be used as collateral and giving it the same treatment as USDT and USDC, without setting an effective limit.
· USDe is essentially a tokenized hedge fund product, fundamentally different from products like BlackRock’s BUIDL, which is a low-risk tokenized money market fund. In contrast, USDe embeds hedge fund-level risk.
· Binance encouraged users to convert USDT and USDC to USDe to earn attractive returns, but did not sufficiently emphasize its underlying risk. From a user’s perspective, trading with USDe seemed no different from traditional stablecoins — yet the actual risk level was significantly higher.
· As the risk escalated with a series of user operations, accompanied by inflated annualized returns, even a slight market shock was enough to trigger a collapse. When volatility struck, USDe quickly lost its peg. Chain liquidations followed rapidly, and risk management flaws around assets like WETH and BNSOL further amplified the crash. The prices of some tokens briefly approached zero. This caused severe damage to global users and businesses (including OKX customers), and the recovery process will take time.
Star emphasized that what is being discussed here is the root cause, not blame or attack on Binance. Candidly discussing systemic risk is sometimes uncomfortable, but if the industry is to mature and take responsibility, this is a necessary step. What the industry needs are leaders who prioritize market stability, transparency, and responsible innovation, rather than those who see criticism as hostility and aim for total victory.
