Opinion: Binance approving and listing SUSHI tokens says more about industry-wide standards rather than Binance’s policy.
Binance’s Changpeng Zhao has received more than his fair share of criticism since Binance’s 2017 launch. As a high-profile crypto figure and the CEO of one of the sector’s largest companies, that is to be expected. But the denunciation leveled at him after the anonymous Chef Nomi’s SushiSwap sell-off scandal has been unwarranted.
Few things are more antithetical to the ethos of decentralized finance than having a single figure being the arbiter of the quality or viability of a project. If crypto and decentralized finance are borne of the desire to democratize financial markets and liberate the public from the centralized banking sector, the responsibility for determining the value of a project must be placed in the hands of the community. Anything less runs entirely counter to the crypto imperative.
We wouldn’t want CZ to determine those projects that capture the hearts and minds of the public just like we don’t want the same from institutions like central banks or legislators.
To trade or not to trade, that is the question
At its core, Binance is an exchange that lists tokens to trade. Its users are free to do their own research and decide whether or not to trade on the platform. The question is not: to list or not to list, but to trade or not to trade. And that can only be answered by crypto traders for themselves.
Binance’s listing rules have always been opaque. As CZ has expressly stated, the exchange does not have fixed rules lest applications are engineered to meet them.
Community enthusiasm is surely one of the key determinants in Binance’s decision to list a token. CZ’s job as a businessperson is to respond to that enthusiasm by offering traders a platform to trade on. Just as shovel merchants are not responsible for compensating luckless gold prospectors, exchanges cannot be blamed for poorly performing tokens.
Rightly avoiding jeopardy
Binance offers trading in coins whose issuers have been subjected to the U.S. Securities and Exchange Commission enforcement action. Others have settled class-action lawsuits. The exchange lists privacy-centric coins when many exchanges bound more tightly by regulatory pressure will not.
If CZ were to play a more active role in anointing projects worth supporting, he would face scorn for picking winners and losers and may well subject himself to unwanted legal jeopardy. Amid the swirling uncertainty of the crypto-regulatory landscape, Binance’s light editorial touch on SUSHI was understandable.
While the SushiSwap situation was unedifying, there remain questions as to how egregious it was. It is not unhealthy for founders to allocate a portion of the tokens to a development fund wallet. Although there is a social contract that those funds nominally align the founders’ incentives with those of the community and won’t be market dumped, all that was exercised here was an execution of the code as it was written. Analysts had warned of that possibility in advance.
Chef Nomi’s rug-pull — as David Hoffman phrased it — was deeply cynical. But CZ is not an accomplice merely for providing the floor space.
This is Part 2 of a two-part debate series exploring the question of whether or not Binance made the right decision in listing the token SUSHI on its exchange. Part 2 presents the supporting side, arguing that Binance was justified in listing the token. Read Part 1 of the debate series challenging Binance’s decision to list the token here.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.