Former Binance Chief Financial Officer Wei Zhou stated on July 2 that diminished trust in centralized exchanges remains the primary cause of the prolonged cryptocurrency downturn. OKX CEO Star Xu publicly endorsed this assessment, linking the weak market to the October 2025 liquidation event, exchange transparency issues, and capital rotation toward artificial intelligence.
Liquidation Event Shattered Confidence
Zhou said the October 10–11 liquidation event inflicted heavy losses on large crypto investors. He added that many traders still doubt major exchanges can prevent similar disruptions during sudden market-moving announcements. Reports later showed roughly $19 billion in leveraged positions were liquidated across global derivatives markets during that period. Binance experienced internal processing delays amid heavy trading activity.
Binance rejected claims that its systems caused the broader decline, arguing the selloff was primarily driven by macroeconomic developments—including U.S. tariff announcements that triggered widespread deleveraging. The exchange also highlighted over $600 million in user compensation after the event, covering price deviations involving USDe, BNSOL, and WBETH.
AI Hardware Draws Capital Away
Zhou noted that strong performance in AI hardware stocks has led many investors to find better returns outside digital assets. He identified three conditions for renewed market strength: passage of the U.S. Clarity Act, blockchain adoption by Google and Meta, and easier digital asset policies in China—calling these potential turning points.
Star Xu responded that trust is the foundation of every financial market, and rebuilding damaged confidence requires years, not days. He described October 11 as a wake-up call: exchanges must prioritize transparency, governance, and sound risk management. He warned that placing short-term corporate interests ahead of users ultimately harms the entire industry.
ETF Outflows and Policy Gridlock
The bear market has been accompanied by nearly $5 billion in ETF outflows and tighter global financial conditions. Zhou said transparency concerns surrounding Binance continue to weigh on institutional confidence. Although OKX CEO did not name Binance directly, his remarks clearly echoed Zhou's critique of accountability failures in centralized exchanges.
Bitcoin has yet to reclaim its 2025 highs, and overall market volumes remain thin. The alignment between a former Binance CFO and a leading exchange CEO underscores a consensus diagnosis: when trust breaks, capital flows toward more transparent and predictable venues—whether AI stocks or compliant crypto platforms.