On April 6, weeks before UST collapsed, Binance promoted the stablecoin on Telegram as a “High Yield, Safe & Happy Earn” investment with an annual 19.63% yield
Context & Ripple Effects
The FT's report closes the loop on the UST collapse arc: weeks after Binance's Telegram channel pitched UST through its Earn program at 19.63% annual yield, the stablecoin lost its dollar peg and the Luna Foundation Guard burned through $1.5B of bitcoin reserves trying to defend it, then pursued a $1B+ rescue raise that reportedly offered LUNA tokens at 50% off. Binance had been in the stablecoin business on its own terms since announcing plans for Binance GBP in 2019 while declining a USD-backed coin — UST's yield was someone else's product on Binance's distribution rails.
First-order effects
- Binance users who bought UST through the 'Safe & Happy Earn' promotion absorbed the depeg directly, and the exchange now owns the reputational gap between a 19.63% 'safe' pitch and a coin that fell as low as $0.60.
Second-order effects
- The promotion puts every yield-marketed stablecoin under the same lens — Ethena's USDe, a 'synthetic dollar' paying 9% with nearly $6B circulating, is the closest living analogue and inherits the question of what backs its advertised return. Binance's own exposure compounds the issue: it alone holds roughly $2.2B of FDUSD, which depegged 9% in April 2025 on First Digital solvency concerns.
Third-order effects
- Regulators are already drawing the line between yield and safety: the SEC's approval of Figure Markets' yield-bearing stablecoin as a registered security points toward a structure where advertised returns force a security classification — leaving unregistered yield promotions like Binance's Telegram pitch on the wrong side of an emerging rule.
The trend: Stablecoin distribution is splitting between regulated, security-registered yield products and exchange-promoted yield marketing that regulators treat as the liability it proved to be in the UST collapse.