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OKX founder and CEO Star Xu revealed in an interview on the New Era Finance Podcast that his team was approached by Three Arrows Capital with a yield-generation proposal, which he declined outright. He also turned down requests from other prime brokers seeking credit lines and delayed liquidation arrangements, two of the mechanisms that later proved catastrophic at rival exchanges.
Why it matters
Xu's position is a direct rebuttal of the business model that collapsed FTX and several other centralized venues during the 2022 cycle. By refusing to put customer deposits to work for yield or extend unsecured credit to large counterparties, OKX avoided the liquidity mismatches that triggered those failures. His framing is explicit: exchanges should generate revenue through technology and services, not by taking risk with user funds.
For institutional and retail users alike, the statement carries weight precisely because it comes with a track record. OKX navigated the Three Arrows Capital collapse and the broader 2022 contagion without a solvency event, and Xu is now articulating the principle that guided those decisions.
Market impact
As regulatory scrutiny of exchange reserve practices intensifies globally, Xu's public stance positions OKX as a compliance-forward venue at a moment when institutional allocators are actively screening counterparty risk. Exchanges that can demonstrate clean segregation of customer funds and disciplined risk management are increasingly winning institutional mandates, and Xu's comments add a named, senior voice to that narrative.
Frequently asked questions
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What specific requests did Star Xu reject that other exchanges accepted?
Xu turned down a yield-generation proposal from Three Arrows Capital and declined requests from prime brokers seeking credit lines and delayed liquidation arrangements, practices that contributed to the collapse of FTX and other venues in 2022.
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How does Xu believe crypto exchanges should generate revenue?
Xu argues exchanges should earn money through their technology and services rather than by deploying customer funds for yield or extending credit to counterparties, keeping user deposits fully segregated and protected.
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Did OKX suffer any solvency issues during the 2022 crypto contagion?
OKX navigated the Three Arrows Capital collapse and the broader 2022 market downturn without a solvency event, which Xu attributes to the disciplined risk management principles he has now publicly articulated.
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Why does Xu's statement matter for institutional investors evaluating exchanges?
Institutional allocators are actively screening counterparty risk and exchange reserve practices post-FTX. A senior founder publicly naming the principles behind a clean track record adds credibility that compliance documents alone cannot.
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How does OKX's approach compare to the model that brought down FTX?
FTX and similar venues used customer deposits to generate yield and extend credit to affiliated counterparties, creating liquidity mismatches. OKX's model, as Xu describes it, treats customer funds as untouchable regardless of how fast assets under management grow.
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