CZ Acknowledges Flaws in Binance Token Listing Process, Calls for Reform and Automation

Changpeng Zhao (CZ), co-founder and former CEO of Binance, has admitted that the token listing process on the cryptocurrency exchange is flawed, highlighting the need for improvements in how centralized exchanges (CEXs) handle new token listings.

CEXs like Binance, Coinbase, and Kraken provide essential liquidity for newly listed cryptocurrencies, often resulting in a significant surge in price performance following the listing. However, Zhao pointed out that the process is flawed, particularly due to the short time between announcement and listing.

Zhao explained the problem in a February 9 post on X (formerly Twitter), stating, “As an observer, I think the Binance listing process is a bit broken. They announce, then list 4 hours later. The notice period is necessary, but in those 4 hours, token prices go high on DEXs, and then people sell on CEX.” He added that decentralized exchanges (DEXs) allow advanced traders to spot emerging cryptocurrencies before they’re listed on CEXs, causing significant market movements once the token becomes available on larger platforms.

This comment came after Binance listed the Test (TST) token, a project that was initially created as part of the BNB Chain’s tutorial but was later picked up by investors as a meme token. Despite the token’s origin as a test coin, influencer communities in China began promoting TST, which led to a massive spike in its market cap. On February 9, TST briefly surged to a peak market cap of $489 million before falling over 50% to $192 million, according to CoinMarketCap data.

Although Zhao clarified that the video in which TST was briefly featured was “not an endorsement,” the incident highlighted the volatility of CEX listings and the unpredictable dynamics that can arise when tokens are promoted or listed unexpectedly.

The Case for Automatic Token Listings

Following the unexpected surge of the TST token, Zhao suggested that the listing process on CEXs could be more efficient if it were automated, similar to the way DEXs operate. “I think CEX should list (almost) everything automatically, just like DEX. But I am not running a CEX anymore,” Zhao remarked. He clarified that his comments were made as an “outsider” no longer involved in the day-to-day operations of Binance or other CEXs.

The suggestion of automatic listings reflects growing concerns in the crypto community about the transparency and fairness of CEX token listing practices. Historically, many new tokens listed on platforms like Binance have experienced sharp declines in value shortly after their debut. In fact, research from May 2024 showed that more than 80% of tokens listed on Binance had lost value within the first six months after listing.

A Shift Toward Fair Launch Tokens

Amidst growing concerns over the CEX listing process, some are pushing for a shift toward decentralized and fair launch models. The recent launch of the Hyperliquid (HYPE) token, which was airdropped through the project’s own order book on its Layer 1 protocol, has sparked discussions about a “new era” for on-chain, fair launch cryptocurrencies.

Vitali Dervoed, co-founder and CEO of Composability Labs, remarked on the significance of the HYPE token’s launch: “The HYPE token launch marks the beginning of the new era between centralized exchange listings and on-chain protocols. It offers a different model where the token is launched directly by the protocol, rather than relying on the traditional CEX listing process.” The HYPE token's airdrop, valued at over $7.5 billion, has garnered significant attention for its unique approach, which bypasses traditional CEX listings altogether.

The rise of such projects suggests that the future of crypto token launches may increasingly shift toward decentralized mechanisms, which could potentially reduce the risks and challenges associated with CEX listings. However, as Zhao pointed out, many challenges remain, and the token listing process across exchanges — centralized and decentralized alike — will continue to evolve.