OKX Founder Star Xu Criticizes CZ's Description of Bailout as Voluntary Generosity
Star Xu, the founder of OKX, criticized former Binance CEO CZ for his statements in a recent interview, pointing out that the crypto market crash on October 10 impacted hundreds of billions of dollars in user assets, causing massive losses for many users and plunging the entire industry into a long winter, shattering wealth, confidence, and hope.
In the interview, CZ stated that Binance offered about $800 million to compensate users who suffered losses on its platform, despite having no obligation to do so, describing it as a voluntary act; he also mentioned that the public tends to focus on negative news, but Binance still maintained net inflows during the controversy, suggesting that the flow of funds reflects the real situation better than the affected community narratives.
Star Xu pointed out that this statement repackages the tragedy of deep industry wounds into a story of Binance's generous compensation, where the $800 million voluntary compensation seems commendable but overlooks the reality of billions of dollars in assets being impacted, countless users suffering heavy losses, and the industry still working to rebuild trust.
The October 10 crash is one of the largest liquidation events in crypto history, with approximately $19 billion in leveraged positions being liquidated; Binance's platform experienced some assets decoupling (such as USDe, BNSOL, WBETH) and system delays during the volatility, subsequently announcing compensation for affected futures, margin, and lending users, initially around $283 million, followed by about $300 million in vouchers and $100 million in low-interest loans, totaling nearly $800 million.
CZ, responding as a shareholder rather than an operator, emphasized that the crash was triggered by macro tariff news, and that Binance's technical issues were not the main cause, having compensated users affected by specific platform issues; he pointed out that competitors amplified the narrative blaming Binance.
Market Mechanism: After large-scale liquidations, exchanges attempt to retain users and restore liquidity through compensation and loans, with continued net inflows indicating that some users still choose the platform; critics argue that the scale of compensation is relatively limited compared to the total industry losses, and the narrative focusing on voluntary actions may weaken discussions on systemic risks and platform responsibilities, with user confidence rebuilding relying on actual fund flows rather than public statements.
Source: Public Information
ABAB AI Insight
CZ founded Binance in 2017 and quickly became the world's largest crypto exchange, emphasizing user protection during market fluctuations, including using company funds to cover gaps in other projects' ICOs in 2017; after pleading guilty to anti-money laundering related charges in 2023 and serving time, he was pardoned and currently speaks as a shareholder while continuing to maintain the platform's market share.
In terms of capital pathways, Binance accumulates capital through trading fees, listing fees, and ecosystem tokens, using hundreds of millions of dollars for user compensation, vouchers, and institutional loans after the crash to stabilize the platform and maintain net inflows; the motivation is to reduce user attrition and address reputational pressure after extreme volatility, while using fund flow data to counter negative narratives and positioning the compensation as a proactive act beyond obligation.
Similar cases include some platforms choosing to cover user losses during the 2017 ICO boom to build trust, and other exchanges strengthening reserve proofs and compensation measures after the FTX crash; the current crypto market is in a rebuilding phase post-liquidation, with leading exchanges competing for user confidence and funds through capital strength and public market narratives.
Essentially, this is about pricing power and narrative control. After extreme volatility exposes leverage and liquidity risks, platforms compete for the definition of event responsibility through selective compensation and fund flow data; user and fund flows ultimately determine platform status, while public statements attempt to transform large-scale losses into localized voluntary actions, thereby influencing subsequent capital and trust distribution.
ABAB News · Law of Cognition
No matter how large the compensation scale, it cannot cover the total industry losses.
Fund flows reflect real trust better than public narratives.
After extreme events, narrative power and capital power are contested simultaneously.