Two tokens that were airdropped to HODLers have plummeted after being listed on Binance, raising user concerns; one new token that was launched through Launchpool modified its community airdrop ratio just before trading commenced, angering the community. Recently, the three new assets RED, GPS, and SHELL that were consecutively listed on Binance have exposed the 'hidden ailments' of the project circle, prompting Binance, which has auditing obligations, to reveal its 'scalpel'.
On March 6, Binance urgently stopped the listing of RED, a move that brought a turning point for community users advocating for the Red Stone project. However, the top exchange's tough stance didn't stop there; even more explosive actions were on the way.
On March 7 and 9, Binance exposed that a certain market maker of GPS continuously sold 70 million GPS, deeming it 'violations', and discovered that this market maker also participated in the market-making activities of SHELL. The profit account of this market maker was frozen by Binance, and they received a market-making ban from the platform. Subsequently, both project parties proposed repurchase and other user compensation plans.
The consecutive occurrences of three new coin incidents have officially opened the curtain on Binance's internal market regulation, with the 'voting for listings/delistings' mechanism being added to the new asset review system. Moreover, Binance has updated the frequency of adding 'Observation Labels' to already listed tokens to 'monthly', continuing to review the performance of internal assets, and any that do not meet the rules will be delisted.
As the cryptocurrency market enters a downtrend, although popular tokens and new assets may have potential flow effects, the world's largest cryptocurrency trading platform has decided to tighten access and impose stricter market entry standards, ringing alarm bells for project parties that 'listing on Binance is the end point'.
Abnormal K-line questioned, Binance exposes the violating market makers.
The strangeness is revealed through the K-line.
In early March, the token GPS (GoPlus Security) from the HODLer airdrop saw a continuous decline after entering the Binance spot trading market. After listing on March 4, GPS opened at about $0.104, closed at about $0.068 on the same day, peaked at around $0.151, which is the highest point it has reached on Binance to date. Since then, GPS has continuously dropped, reaching a low of about $0.032, and currently only stands at $0.038, nearly halving from its first day closing price and dropping 74.83% from its peak.
This blockchain project primarily focused on Web3 security has not performed very safely in the secondary market, but in just over a week, it has gone through a trend that some older cryptocurrencies in the crypto circle need to experience for a bull-bear cycle.
Users participating in the secondary market trading of GPS have criticized it, raising doubts about the HODLer airdrop product as well, since the token project SHELL (My Shell) launched through this airdrop channel in February also exhibited similar trends, having halved from a closing price of around $0.59 on the first day to about $0.257.
Compared to the other two HODLer airdrop projects, GPS and SHELL have shown a 'waterfall' trend (data as of March 10).
Previously, the tokens KAITO and LAYER that were launched through the HODLer airdrop saw fluctuations in line with the market. In contrast, the waterfall trend of GPS and SHELL appears abnormal. Multiple users have raised questions on social media, 'Is the project party unloading on Binance?'
Until March 7, Binance announced its own 'big scoop', GPS was tagged with 'Observation Label', the reason being that the price of GPS plummeted significantly after being listed on the spot market, due to some market maker's abnormal market behavior. Binance acted swiftly, directly freezing the market maker's account.
According to Binance's investigation results, from 21:00 on March 4 to 17:55 the next day, the market maker sold approximately 70 million GPS in 21 hours without placing any buy orders; after the spot trading was opened, this market maker continued to sell tokens, accruing profits of about 5 million USDT, becoming the largest profit-maker.
Once the news broke, the market was in an uproar, and users seemed to have found the reason behind GPS's continuous decline, but Binance's investigation was not over.
On March 9, Binance officially announced that this market maker was also responsible for the market-making activities of MyShell (SHELL). Although Binance has not yet disclosed the name of the market maker, it clearly determined that their actions were 'violations' and dealt two major blows: removing this market maker from the platform and prohibiting them from engaging in any market-making activities on Binance; confiscating the market maker's relevant earnings, which will be used to compensate users of GPS and SHELL projects.
Binance's tough stance has also prompted remedial actions from project parties.
On March 10, MyShell stated that it had terminated its relationship with the abnormal market maker upon receiving Binance's investigation report, and introduced several new partners to ensure stable liquidity. All Binance accounts associated with the market maker have been suspended, and all remaining assets will be transferred to the new market maker. Additionally, all stablecoins sold by this market maker will be used to repurchase SHELL within 90 days, and the official will disclose the wallet addresses related to the repurchase for community verification.
On March 11, GoPlus Security stated on platform X that the 4.34 million USDT generated from GPS trading in the frozen former market maker's account would return to the control of the project party after completing regulatory processes, and these funds would be used to repurchase GPS tokens within 90 days, with all repurchased tokens to be permanently destroyed. In addition to the repurchase, GoPlus Security will allocate an additional $2 million to compensate users who net purchased during the period of the market maker's violations on Binance, and this compensation plan includes spot and leverage users.
In response to the anomalies of the two projects, Binance's intervention has received praise from many users, and its actions against the market makers of GPS and SHELL can be seen as a form of self-defense for the platform's users. Some users believe that Binance has only pulled back the curtain on the problematic projects, 'GPS and SHELL had already entered other exchanges, but the market maker issues had not been discovered until they were listed on Binance to exploit the users here?'
People hope that platforms providing trading venues will conduct stricter reviews and supervise the entire process of project tokens entering the market; Binance is adopting these voices.
Community voices need to resonate, user voting for 'listings/delistings'.
On March 7, Binance announced the optimization of the listing policy, adding 'voting for listings' and 'voting for delistings' mechanisms to achieve community co-governance. It stated that the platform would not profit from listings and would continue to disclose the marketing expenses of each project in the listing announcements, distributing airdrops to Binance users in batches according to the token unlock schedule.
Another incident of new coins at Binance may have prompted the introduction of the new mechanism.
On March 6, the modular blockchain project RED (Red Stone) was suddenly halted by Binance 20 minutes before its originally scheduled listing for spot trading due to 'RedStone (RED) unexpectedly changing its community airdrop distribution at the last minute', meaning the project party temporarily reduced the promised total supply of 9.5% of tokens to the community to 5%.
At this time, RedStone's sudden increase in airdrop acquisition conditions has led to a large number of community members who worked hard on-chain to complete tasks not receiving the airdrops, and this maneuver is clearly inciting community anger, with the grievances being conveyed to Binance.
After Binance showed a tough attitude towards the project team's temporary changes to the economic model, RedStone made a compromise, releasing an additional 2% from the 'Ecosystem & Data Providers' fund pool to compensate some community contributors who failed to receive airdrops.
On the same day that the RED incident reached a phased resolution, Binance added the dimension of 'community co-governance' to the listing process.
Binance stated that the community has provided many valuable opinions on new listings, and the platform has always valued the voices of the community. After testing and evaluation, it has decided to comprehensively optimize the listing mechanism, with 'voting for listings/delistings' granting users more rights to participate in decision-making. The core goal is to provide users with opportunities for value discovery while ensuring the quality, innovation, and compliance of projects.
According to the specific mechanisms announced by Binance, users with a mother account holding no less than 0.01 BNB can vote in favor of their favorite projects, and projects with high votes that pass due diligence will be listed on Binance. The platform will select projects from the market and Alpha observation area to enter the voting pool; for projects with no product development updates, poor community and project maintenance, failure to regularly disclose progress, increased issuance, or significant risk behaviors, Binance will list them in the main site 'Risk Monitoring Zone', and will mark projects that do not cooperate in providing token-related information, allowing users to express their intention to delist projects already in the 'Risk Monitoring Zone' through voting.
This means that being listed on Binance is not the end of development for project parties and may likely lead to delisting due to user votes.
In addition, Binance has also clarified the channels for new assets in the governance content, mainly including:
Binance has clarified four channels for new listings and the pre-market trading mechanism.
It is worth noting that Binance will include the 'pre-market' trial in the governance process for listing new coins when RED goes live, but has decided to cancel the limit on price increases designed for pre-market trading. Traders analyze that this move is beneficial to reduce the platform's intervention in prices, allowing for a more market-driven price discovery of new assets.
Binance stated that the 'pre-market' can provide users with an opportunity to trade Launchpool tokens early and provides users with early value discovery opportunities before the tokens are officially listed on the spot market. At the same time, Binance reminds that while pre-market trading can provide users with strategic layout and early profit opportunities, participants must understand the qualification requirements and potential risks involved.
Is being listed on Binance enough to meet standards? The multi-dimensional review has just begun.
Binance's actions against the three problematic projects also signify that the world's largest trading platform by volume will start to select new assets more rigorously this year, and the strict review process will not only apply to listings.
On March 4, Binance announced that the frequency of adding 'Observation Labels' to already listed assets would be adjusted from an indefinite period to 'monthly', meaning that new projects would be added in the first week of each month; while the removal of observation labels and seed labels would remain subject to 'quarterly' reviews.
In other words, Binance will more frequently review the performance of already listed assets. Once a token is 'observed' in a month, to remove the label, it must perform well within the quarterly range; otherwise, the probability of being delisted will significantly increase.
'Adding Observation Labels' is Binance's ongoing periodic review method for more mature cryptocurrency projects. Once a project is tagged with an 'Observation Label', it means that these tokens may have higher volatility and risk; if they do not meet Binance's listing standards, they may also be delisted.
27 tokens have been tagged with 'Observation Label' in the Binance market.
Tokens entering the 'Observation Zone' will be displayed with risk warning banners on Binance. Users will also be practically audited on their understanding of the risks associated with 'Observation Label' tokens—if users want to trade tokens with an 'Observation Label', they need to complete a test every 90 days, and trading permissions will only be granted after accepting the terms of use.
As of now, 27 tokens have been tagged with 'Observation Label', which includes both new tokens like GPS that recently entered due to violations and familiar market tokens like ZEC, FTT, BAL, and ARK.
So what are the standards for a project to be added or removed from the 'Observation Label'?
Binance has also listed review reference factors in its various addition announcements, including the team's commitment to the project, the level and quality of project advancement, trading volume and liquidity, protection from attacks while maintaining network stability and security, stability of the network/smart contracts, community maintenance, responsiveness to Binance's periodic reviews, unethical/fraudulent behavior, and contributions to the overall blockchain ecosystem.
In addition, the GPS market maker incident will also prompt Binance to conduct 'post-listing reviews' from dimensions that the market values more, namely whether liquidity performance is normal.
In the announcement of the investigation results regarding GPS, Binance criticized all market makers authorized by the platform's projects, demanding that they must comply with platform rules, or Binance will take action. These principles and rules include:
Ensure that both buy and sell orders are supported by hanging orders.
Ensure that there are sufficient order volumes at designated depth levels.
Provide healthy and stable market depth in the trading market.
Ensure that hanging orders are retained for a certain period to avoid high-frequency order cancellations disrupting the market.
On March 13, Binance directed its stringent scrutiny towards the early project discovery platform Alpha in its Web3 wallet, stating that it will regularly review the 'Observation Selection Pool', and any tokens that do not meet the platform's 'quantitative indicators' and 'qualitative standards' will be removed from Alpha. On the day of the official announcement, 21 tokens were removed.
The 'Two Determinations' framework of Binance Alpha includes:
Quantitative indicators: trading volume stability, liquidity depth, on-chain trading frequency, token holder distribution, and other relevant indicators.
Qualitative standards: project team credibility, regulatory compliance, ecosystem synergy, community recognition, and other relevant factors.
Since its launch, Alpha products have been interpreted by the outside world as an important pool for Binance to select new assets from the on-chain ecosystem. Although there is no guarantee that they will be listed on the main Binance site, its listing observation area gathers many tokens with market heat, and some projects that conducted exclusive TGE (Genesis Issuance) on the Binance Web3 wallet have directly accessed the Alpha selection pool, with a few having obtained 'tickets' to enter the main Binance site.
Now, under the new 'Two Determinations' review standards, a large number of tokens have been removed, which also means that if a token wants to be favored by Binance from Alpha, it must first pass the 'Two Determinations' hurdle, and then go through user 'voting'; even if it passes and is listed, it must continue to undergo the platform's review and remain vigilant against being tagged with 'Observation Labels'.
This time, the strict review initiated by the new coin turmoil at Binance is also a 'wake-up call' to the project circle from the world's largest trading platform.
Whether in the past, the 'brushing volume marketing' of 'doing points, promoting interaction, getting airdrops' that became popular on-chain, or the thinking of 'first listing on small platforms to gain recognition, then listing on large platforms to harvest', all of these will to some extent dispel the project parties' fantasy that 'listing on Binance is the end goal' amid Binance's increasingly stringent listing reviews, monitoring of trades, and the entire process of being voted for delisting, injecting some crisis awareness into them.
In the current bearish environment of the entire cryptocurrency market, Binance's approach can be described as 'scraping the bone to cure poison', showing the determination to 'even if sacrificing the potential capacity of hot assets, we must protect the people inside the door'. This is also a reform that a commercially leading entity must undertake under the background of the cryptocurrency market moving towards compliance.
(Statement: Readers should strictly adhere to local laws and regulations; this article does not represent any investment advice.)