OKX CEO Star Xu said the October 10 crash was not an accident but the result of high-risk USDE-bound yield campaigns that make up the common hidden rate, reversing after Binance released a report that attributed the crash to macroeconomic shocks and market structure issues.
In a statement released on Friday, Xu said the incident, which wiped out more than $19 billion in 24 hours and affected 1.6 million merchants, was “caused by useless marketing campaigns by some companies.”
“We clearly saw that the microstructure of the crypto market changed dramatically after that day,” Xu said. “Many industry stakeholders believe the damage was worse than the FTX collapse.”
According to Xu, systemic risks have quietly built up in all platforms before being exposed by market volatility.
He said the root of the problem is user acquisition campaigns that promote double-digit yields on USDE while allowing it to be used as collateral and treated with the same risk assumptions as USDT and USDC.
“USDe is very different from products like BlackRock BUIDL and Franklin Templeton BENJI, which are money market funds with a low-risk profile. USDe, in contrast, embeds hedge-fund-level risk,” Xu noted.
In fact, USDE traded as if it could be exchanged with stablecoins despite its high risk profile, said OKX’s CEO, adding that this encouraged usage loops where users repeatedly exchanged USDT and USDC for USDE, borrowed, and re-used the proceeds to chase yield, pushing the headline APYs from 270% to more.
While market volatility peaked on October 10, Xu said even a small market shock was enough to cause a rapid collapse. The USde was devalued, sales decreased in all areas, and weakness in risk management in other assets such as increased losses of WETH and BNSOL, other tokens traded slowly near zero.
He said the impact on global users and companies, including OKX’s customers, is dire and recovery will take time.
“I am discussing the main cause, not to blame or launch an attack on Binance. Talking openly about system risks is sometimes uncomfortable, but it is necessary if the industry is to mature with accountability,” explained Xu, pointing out that Binance has a major responsibility for the stability of the market.
The accident occurred amid tensions following Donald Trump’s announcement of 100% tariffs on Chinese imports. Higher highs across the middle markets added to the selling pressure.
ARK Invest CEO Cathie Wood said on ‘Claman Countdown’ this month that the severity of the crash was linked to a software error in Binance, which she called an “aftershock” of earlier market instability.
Xu previously pointed to an “industry-leading company” as the main culprit, accusing the exchange of managing substandard tokens in ways he compared to Ponzi schemes. He said such practices have destroyed trust in the entire crypto industry.
In its report, Binance said the crypto crash was caused by macroeconomic shocks, high volatility across the market, market makers withdrawing funds under high volatility, and Ethereum network congestion.
Binance said its systems remained operational during the selloff, with minor issues occurring after most shutdowns. The exchange compensated affected users and improved security after the event.
