- Binance CEO Changpeng Zhao has admitted that he’s happily cashing in on the DeFi hype by listing tokens and watching the mayhem unfold
- Binance is doing no due diligence on these DeFi projects, simply listing them willy nilly
- Whether you get rekt or not when a project owner dumps his bags, Binance and CZ don’t care – they just want your money
Being one of the most powerful men in the crypto world certainly has it perks – you get to make the rules. And that’s exactly how Changpeng Zhao (CZ) is playing out this DeFi craze. After rambling on about how Binance has the toughest listing criteria, the most stringent listing process, blah blah, CZ has come out and shown his other face, admitting that he’s just trying to grab your money.
CZ posted two Tweets to his personal account after the great Sushi dump where the founder dumped his entire bags, crashing the price. In his Tweets, CZ said that Binance doesn’t know who the founder is and that if Binance doesn’t add new DeFi coins then it becomes obsolete.
So, right there, CZ proved that his pockets are more important than maintaining Binance’s integrity and reputation that he’s always harping on about…
Did I Faux Pas?
Shortly after posting his Tweets, CZ decided, or was instructed to by his legal team, that it’s time to take the Tweets down. Fortunately, the crypto world screen grabbed the Tweets, immortalizing them for all eternity. While CZ does end his first Tweet by saying that all coins are high risk, especially DeFi, if you don’t know who the founder is of a three-week old project, then it’s probably best not to list it – unless you throw your listing policies out the window.
Can’t have it both ways. CZ is constantly flexing how Binance’s listing team does the most due diligence and how its listed projects perform the best. When it doesn’t work – “we are only providing access to liquidity so other exchanges don’t make us obsolete” LMAO pic.twitter.com/jMydz6LTNc
— Larry Cermak (@lawmaster) September 6, 2020
Now, CZ has claimed that Binance will list any old coin or token that has enough followers on Twitter, enough community engagement, enough wallet addressed and is popular enough. Given the DeFi craze, you can understand why CZ and Binance opted to list Sushi, but then admitting to have done 0 research is a bit absurd. The whole purpose of a due diligence team and process is to protect traders and the reputation of your exchange from exit scammers.
In Binance’s listing process, it clearly states that Binance needs the founder or CEO to fill in the listing form so that if something goes wrong, like an exit scam, then Binance can speak to the key person, not just an account manager. Now, CZ’s Tweet states that Binance doesn’t even know who the CEO is. One rule for some, and another rule for the rest it appears.
— Crypto Michaël (@CryptoMichNL) September 6, 2020
Is Binance Becoming a Sheep Exchange?
CZ and Binance certainly like to stay relevant, and like CZ says, running an exchange is a business. So, it makes sense to follow the crowds, list the tokens, take the fees and watch traders get rekt along the way – it’s how a lot of exchanges work. Does Binance have some form of obligation to perform due diligence on the coins and tokens it lists? Legally it’s a bit of a grey area as it will depend on local regulations in the industry. Morally, it needs to be done to protect people from exit scams. Effectively, Chef Nomi from Sushi just printed his own money, persuaded people it’s real money, Binance sold you the money and he ran, with Binance taking a cut for being his accomplice.
It’s Still Your Choice
CZ knows that there are too many people in the crypto space that genuinely don’t have a clue what they’re doing. They’re just here to throw around money and try to make a fortune as quickly as possible. Unfortunately, these people will largely go on to lose everything and end up homeless and broke as a result. So, there is some sense of onus on exchange to look out for their users and protect them from this kind of future. Heck, traditional finance has similar measures in place and it’s not even anywhere near as volatile.
At the end of the day, it’s still down to you whether you want to invest in a DeFi project that’s not even a month old and is a complete copy of another DeFi project. If you do opt to be a DeFi sheep and risk your finances playing on Binance, then it’s up to you. But make sure you know that Bianance and CZ don’t care about you, just the listing fees they collect and the commissions from your trades.