Changpeng "CZ" Zhao, Binance's co-founder and former CEO, has voiced concerns over the cryptocurrency exchange's token listing process, calling it "a bit broken" after the Test (TST) token incident exposed flaws in how new listings are handled.
Binance accidentally revealed the name of TST — a test token used in a BNB Chain tutorial video — leading traders to speculate that it was an official launch.
Within hours, TST surged to a $500 million market cap before crashing, noting how retail traders rush to buy tokens ahead of centralized exchange (CEX) listings.
"As an observer, I think the Binance listing process is a bit broken," CZ posted on X on Feb. 9. "They announce, then list 4 hours later. The notice period is necessary, but in those 4 hours, the token prices go high on DEXes, and then people sell on CEX."
Memecoin frenzy
CZ has distanced himself from the hype surrounding memecoins but acknowledged their rise in popularity, suggesting regulatory scrutiny against utility tokens has played a role.
"Over the past four years, a powerful regulatory agency sued anyone with any utility token, falsely claiming they are securities," he noted, without naming the SEC directly.
The scrutiny intensified in 2023 when the Securities and Exchange Commission (SEC) sued Binance and CZ himself for alleged securities violations. As part of a multi-billion-dollar settlement with the US Department of Justice, CZ stepped down as CEO, but his opinions still influence the crypto industry.
While he remains skeptical of meme coins, CZ defended their existence. "Not 'into' something doesn't mean I am against it," he wrote.
CZ proposed a new approach, suggesting CEXs should list tokens "automatically" like decentralized exchanges (DEXs), allowing the market to determine winners and losers.
"I think CEX should list (almost) everything automatically, just like DEX," he said. "But I am not running a CEX anymore."
Coinbase CEO calls for overhaul of token listings
Meanwhile, Coinbase CEO Brian Armstrong proposed a major shift in Coinbase's asset listing process to address the overwhelming surge in new token creations.
In a Jan. 24 post on X, Armstrong noted the challenges posed by the exponential growth of digital assets.
"We need to rethink our listing process at Coinbase, given there are 1 million tokens a week being created now, and growing," he said.
Binance co-founder Responds to CZ's criticism
Binance co-founder Yi He responded to Zhao's remarks that the current system is "a bit broken."
In a post on Substack , Yi He said that Binance's traditionally strict selection process for token listings is becoming outdated.
"In a free-market environment like the crypto industry, I've been reflecting on whether Binance's 'strict selection' mechanism is becoming outdated," she said. "In fact, last year, between New Year's Day and the Lunar New Year, I initiated some reforms in our listing department."
Yi He noted three key benchmarks that Binance uses to evaluate new listings. First, she explained that while Binance does not control a token's price post-listing, its performance relative to the market serves as an indicator of listing quality.
"If our listed tokens outperform those on other exchanges, it indicates a strong listing selection. Conversely, if performance is poor, it may mean there were errors or biases in our selection process or issues with timing," she stated.
Another major factor is whether a project can bring genuine innovation and attract new users to the industry. Yi He cited projects like Telegram's mini-games, which introduced fresh concepts and onboarded a wave of new users into the blockchain space.
"The key question is whether these users become long-term participants in the crypto ecosystem or merely register on Binance without further engagement," she added.
Lastly, she acknowledged Binance's consideration of high-profile projects with strong market buzz and valuations, even when they are already listed on other exchanges.
"If a high-profile project — particularly one with strong technological appeal and market hype — is not listed on Binance, we risk losing market share," she admitted.
