In a recent tweet, Binance (BNB) CEO Changpeng Zhao (CZ) may have inadvertently admitted his involvement in the management of the recently acquired CoinMarketCap (CMC).

Following in Elon Musk'southward footsteps?

Zhao'due south tweet from May 14 seemingly admits his involvement in managing CMC:

Source: Twitter

Source: Twitter

If he is not involved in the managerial decisions of CMC, including the configuration of various metrics, then it raises the question — why is the CEO of Binance making public statements that suggest otherwise? At the very to the lowest degree, this resembles public pressure on CMC'southward management.

The situation is reminiscent of a Twitter-enabled gaffe by Elon Musk, in which careless tweeting got the entrepreneur into trouble with the SEC. Binance'south undisclosed and presumably off-shore jurisdiction may shield from the regulators; however, information technology volition non brand information technology immune to the reputational damage.

Conflict of interest

Binance's acquisition of CMC raised some eyebrows from the commencement. Many saw loftier potential for conflict of interest. But Binance bodacious the customs that the 2 business organisation entities would remain independent of each other:

"No Binance employee, including CZ, has control over CoinMarketCap'south ranking algorithms or listing processes. Cryptoassets that wish to exist listed on CoinMarketCap should follow the guidelines in our list policy and will be fairly and independently evaluated on their merits."

Binance competitors reply

Many have called this independence into question in light of the contempo reshuffling of exchange ranking metrics, which put Binance in the number one position. Information technology led to the OkEx master strategy officer Alysa Xu proclaiming CMC rankings "expressionless."

Clay Collins, CEO of CMC competitor Nomics, told Cointelegraph that Binance also tops Nomics' own exchange index, but he even so believes the latest changes to the CMC metrics could backlash against Binance in the long term:

"Binance could find itself under much more than scrutiny if CoinMarketCap was ever plant to misrepresent financial data in a way that (1) directly aided Binance and injure traders, or (2) leveraged CoinMarketCap's position to help Binance proceeds an unfair competitive reward over other exchanges, especially if traders were also afflicted. Even if the misrepresentation were the result of a problems."

Ciara Sun, head of global markets at Huobi Group, told Cointelegraph that CZ's tweet seems to allude his involvement:

"CZ'southward tweet stating that they will 'continue to iterate' on CMC's ranking arrangement certainly seems to insinuate his involvement simply I'll exit that up to the community to interpret."

Sunday believes that CMC'due south acquisition by Binance "compromises its neutrality," further noting that an exchange that was hacked for 7,000 Bitcoins (BTC) should never receive a perfect score:

"In addition to the limitations of metrics similar web traffic, CMC's ranking system does not weigh other crucial factors like an substitution's security, compliance and licensing, and total assets under management (AUM). Any exchange that was hacked for 7,000 BTC should never receive a perfect score. Compliance is perchance one of the most important indicators of a trustworthy commutation. And AUM says much more most an commutation than web traffic. (Huobi is currently managing more than 5% of the full coin market cap.) I'd even advise community voting as a metric in lieu of a clear framework for assessing real trading volume."

Lennix Lai, director of financial markets of OKEx, as well told Cointelegraph that he finds the new ranking "biased":

"Website traffic is known to be one of the most biased parameters to rank an commutation - considering the metric would exist easily distorted by mobile and VPN-directed traffic. And that'due south why most data analytics sites pivoted to a more scientific, robust approach via ranking exchanges past a blended score on book, liquidity and market depth. It's skeptical to me that CMC who promoted its data and transparency via its DATA initiatives however right now backpedaling with a de-facto biased parameter."

CZ responds

In a statement to Cointelegrpah, CZ reaffirmed that no substitution volition exist manually pigeonholed into the kickoff spot:

"At no fourth dimension will Binance.com (or any other commutation) be 'manually' stock-still into a position, e'er. We will always strive to use a combination of metrics to attain the near trusted information and rankings for users. And if Binance.com ranks start, it ranks first, if it doesn't, information technology doesn't. There is no manual tweaking of any ordering for any exchange."

Although the crypto industry oftentimes operates outside of typical business norms, reputation nevertheless matters.