OKX CEO: Binance’s USDe Yield Campaign Caused the October 10 Crash
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 of Ethena’s USDe artificial greenback.
OKX CEO Slams Binance’s ‘Irresponsible’ USDe Marketing
In a January 31 submit on X (previously Twitter), Xu claimed that the market crash was not a random accident of complexity however a foreseeable failure of threat administration.
“No complexity. No accident. 10/10 was attributable to irresponsible advertising campaigns by sure firms,” 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.
According to the OKX chief government, Binance provided a 12% annual yield on USDe. This allowed customers to collateralize the asset on phrases corresponding to these of traditional stablecoins such as USDT and USDC.
Xu argued that this created a “leveraged loop” by which merchants transformed customary stablecoins into USDe to farm yield. He claimed this exercise artificially inflated the token’s perceived APY to charges as high 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.
Unlike 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 threat engines couldn’t include, notably affecting property like WETH and BNSOL.
According to him, some tokens briefly traded at near-zero ranges, and USDe’s “synthetic” stability masked the accumulation of systemic threat till it was too late.
“As the largest world platform, Binance has outsized affect—and corresponding duty—as an trade chief. Long-term belief in crypto can’t be constructed on short-term yield video games, extreme leverage, or advertising practices that obscure threat,” Xu concluded
Binance, Ethena Rebut OKX’s Theory
However, main trade stakeholders have forcefully rejected Xu’s narrative, citing transaction knowledge that contradicts his timeline.
Haseeb Qureshi, managing associate at Dragonfly, argued that Xu’s idea fails to account for the order of occasions. According to Qureshi, Bitcoin’s value bottomed a full half-hour earlier than the USDe deviated from its peg on Binance.
“USDe clearly can’t have induced 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 might probably’t clarify how each single alternate noticed large wipeouts,” Qureshi added.
Ethena Labs founder Guy Young additionally disputed Xu’s claims. He cited order-book knowledge that proves that the USDe’s value discrepancy occurred solely after the broader market had already crashed.
Binance, in the meantime, maintained that the problem stemmed from a “liquidity vacuum” relatively than its product choices.
The alternate launched knowledge indicating that Bitcoin liquidity was “zero or close to zero” throughout most main venues throughout the crash. This skinny market created a state of affairs by which mechanical promoting drove costs down disproportionately.
The alternate additionally denied any systemic manipulation, attributing the chaotic value motion to market makers pulling stock in response to excessive volatility and API latency.
Nonetheless, this battle highlights the intensifying blame game between top crypto exchanges as they face continued scrutiny over the structural fragility revealed throughout the October 10 incident.
The submit OKX CEO: Binance’s USDe Yield Campaign Caused the October 10 Crash appeared first on BeInCrypto.