Is CZ's return a good thing for Binance?

Author: Gu Yu, ChainCatcher

Last night, U.S. President Trump announced a pardon for Binance founder CZ, which means the U.S. government has lifted the previous restrictions preventing CZ from operating financial businesses, creating the conditions for CZ to return to Binance's frontline operations and CEO position.

After the news was announced, mainstream cryptocurrency prices surged. Considering that Trump has previously pardoned several crypto individuals sentenced to various terms, as well as the increasingly deep relationship between crypto capital and the Trump family, this has been interpreted as a further positive signal from Trump towards the crypto industry.

For CZ, this is indeed a significant moment. He stated on Twitter that he would do everything possible to help the U.S. become the capital of cryptocurrency and promote the development of Web3 globally.

However, compared to these macro issues, the public is more concerned about the impact or adjustments CZ will bring to Binance after leaving the frontline operations for more than a year, especially whether his return will bring more wealth effects to Binance.

In the nearly two years since CZ's departure, there have been significant changes in Binance's internal and external environment. From the early launch of the Web3 wallet by OKX, which challenged Binance in areas such as inscriptions and memes, to Hyperliquid capturing a large market share in the perpetual contract sector. Meanwhile, major competitor Coinbase has acquired more than a dozen projects in the past year to fill its own gaps or enrich its product line, such as Deribit, Sensible, Spindl, Opyn, etc.

Perhaps influenced by the previous $4.3 billion settlement paid to the U.S. government, Binance has maintained a very restrained attitude in terms of product lines and acquisitions over the past two years. Apart from following the trend to launch a Web3 wallet, there have been few major moves. Yet, in this context, Binance launched the Binance Alpha, a game-changing product, successfully consolidating its advantages in user traffic and trading volume by leveraging its position in liquidity and influence, which also drove the price of BNB to new highs.

However, while attracting a large number of users and providing substantial airdrops, Binance Alpha has become a target for many altcoin projects to exit liquidity. Recently, there have been multiple instances of tokens plummeting immediately after being listed on Binance Alpha, causing significant losses for many retail investors.

Many opinions suggest that the low threshold for listing on Binance Alpha has negatively impacted the development paths of project teams and even the industry ecosystem. "This mechanism seems to benefit a large number of small projects, reigniting new possibilities for ICOs, but in reality, it creates an incentive trap where short-term monetization outweighs long-term construction. To some extent, the monopoly of BNB is not just about attention and liquidity, but about changing the entire industry's rules of the game—replacing 'long-term construction' with 'quick exit,'" said independent researcher Haotian.

From the outside, exchanges represented by Binance have become the role of exploiting all liquidity and premiums in this cycle. Base's head, Jesse, also sarcastically remarked, "If you're ready to fight against CEX listing projects that charge 2-9% of token supply fees, please raise your hand."

For an exchange chasing users and profits, Binance's actions are understandable; all goals can revolve around collecting more trading fees. However, as a "pillar" of the industry and having repeatedly positioned itself as an important builder dedicated to industry development, the expectations for Binance extend beyond its own status to guiding and building a positive development for the industry.

It is unknown how CZ will view and adjust the operational mechanism of Binance Alpha after nearly two years of not directly participating in Binance's operations, but his recent series of statements and actions regarding BNB Chain and memes on X have already "angered" a considerable number of users.

For a long time, BNB Chain has been one of Binance's core strategic directions, but its ecological development status has always been unsatisfactory, far less open and diverse than other chains like Base. The main ecological projects, such as PancakeSwap, Aster, and Lista DAO, mostly have backgrounds related to Binance and the Chinese community, and are even directly managed by Binance employees, with few other ecological types outside of DeFi.

Starting a year ago, chains like Solana attracted a large user flow with memecoins, while BNB Chain did not keep pace with the market. CZ subsequently provided many personal elements (such as dog names, nicknames, and statements), driving the rise of tokens based on BNB Chain like &BROCCO, $CZDOG, $4, $GIGGLE, and $BinanceLife, successfully establishing BNB Chain's foothold in the memecoin wave.

However, CZ's level of involvement in this memecoin wave has led many to believe he has lost perspective. "As a leading figure in the industry, he shouldn't lead retail investors to gamble on meme coins," said crypto KOL @cs_zhaozilong.

The contributions of Binance and CZ to the industry are undoubtedly significant and remarkable, but looking at the overall ecosystem of the crypto industry, memecoins have very limited contributions to industry construction. If CZ is merely complacent about his own traffic and user growth, it will be difficult for the public to have higher expectations of him. Especially in this context, can CZ lead Binance to further break through the ceilings of growth and compliance?

To make matters worse, Binance's fundamentals have recently come under significant scrutiny. In the recent 1011 crash, the role Binance played has also raised many questions. Numerous crypto industry executives and KOLs have accused Binance's internal oracle malfunction as the cause of the market crash. Although Binance issued explanations and compensated some users, it still reflects significant flaws in Binance's trading structure and risk control. Moreover, this is not an isolated incident.

While this is unlikely to shake Binance's leading position in the exchange sector, it will inevitably have a certain negative impact on the public image of the crypto industry in the global market, regulatory attitudes towards crypto trading, and Binance's overall industry competitiveness. For CZ, who emphasizes industry responsibility, this will be an exceptionally complex situation.