The totem of the crypto bear market CZ returns, can confidence and innovative vitality be revived?

Author: flowie, ChainCatcher

After four months in prison, CZ is expected to return in a few hours. This Chinese entrepreneur has officially passed through the first major "tribulation" in leading Binance towards becoming a global giant.

Looking back at the historic November 22 of last year, CZ pleaded guilty, resigned as CEO of Binance, and accepted a staggering fine of over $4 billion, causing the crypto market to plunge into turmoil.

However, with CZ and Binance's acceptance of the penalties, the crypto industry has officially ended its wild west era. Soon after, the approval of Bitcoin spot ETFs and Ethereum ETFs in the U.S. allowed crypto newcomers to leverage their cash capabilities to compete for influence in the U.S. elections, making crypto no longer niche.

During CZ's nearly year-long absence, it has also been a critical period for Binance and the entire crypto market, transitioning from the wild west to strong compliance, from niche to mainstream.

Under the leadership of He Yi and new CEO Richard Teng, Binance has seen stable business growth, with its historical trading volume surpassing $100 trillion for the first time in September.

However, not everything has gone as smoothly as expected. Faced with a rapidly changing crypto market, Binance has inevitably experienced some strategic confusion and has been embroiled in significant controversies regarding its listing strategies.

Binance's fate is a microcosm of the crypto industry. Amidst the alternating cycles of hope and confusion, the massive influx of funds from Wall Street briefly pushed Bitcoin above $70,000, but crypto innovation seems to have failed to keep pace. Participants, including project teams, VCs, and retail investors, have not enjoyed the immense wealth seen in the previous bull market cycle. This round of the crypto bull market has thus been criticized as a false bull market.

As the Federal Reserve begins its interest rate cut cycle, can the return of crypto icon CZ inject confidence and innovative vitality back into the confused crypto market?

Binance is no longer wild; crypto has entered a strong compliance era

After CZ's resignation, the regulatory hammer on Binance has not ceased. Earlier this year, Nigeria announced that Binance was suspected of engaging in illegal financial transactions on its platform, detaining Binance executives Tigran Gambaryan and Nadeem Anjarwalla, accusing Binance of exacerbating the collapse of its national currency.

However, the continuous regulatory pressure has forced Binance to transition from the wild west to full compliance.

In addition to the CEO position being taken over by Richard Teng, who has thirty years of experience in financial services and regulation, many other senior positions at Binance have also changed, including Chief Marketing Officer, Chief Strategy Officer, Head of Product, Vice President of Custody, and Vice President of Compliance.

Binance's investment in compliance has reached unprecedented levels in terms of manpower and financial resources.

According to a Bloomberg report at the end of August, many of the 1,000 employees Binance plans to hire this year will focus on compliance, with annual compliance expenditures exceeding $200 million.

Richard Teng has also stated that he plans to expand the compliance team to 700 people by the end of 2024, while the company continues to strive for the establishment of a global headquarters.

Not only Binance, but under stronger regulatory pressure, other exchanges and leading projects are also prioritizing compliance as their primary development strategy. Regions like Hong Kong are actively promoting the establishment of licensed exchanges.

The U.S. regulatory actions against Binance also signify that crypto is beginning to enter the mainstream.

On one hand, Bitcoin spot ETFs and Ethereum ETFs were approved in early and mid-2024, respectively, with Wall Street forces rushing in. Financial giants like BlackRock are not only positioning themselves in assets like Bitcoin and Ethereum but are also venturing into crypto innovations like RWA.

On the other hand, under regulatory pressure, crypto newcomers are no longer sitting idle. They are influencing U.S. politicians' attitudes towards crypto assets by providing campaign funding to pro-crypto candidates.

In the 2024 U.S. elections, crypto donations far exceeded those in the previous election cycle, leading to several notable moments where candidates like Trump, Biden, and Harris heavily leveraged crypto. The 2024 Bitcoin conference has also transformed from a technical forum into a political stage.

However, as the wild west era comes to an end, and with more professional players entering the gold rush in traditional markets, the dynamics of crypto are changing, and Binance, along with the crypto market, is inevitably facing a period of growing pains.

Controversies for Binance, Confusion for Crypto

Compared to the staggering fine of over $4 billion, the crypto community was more concerned about the impact of CZ's departure on Binance's future development. However, it has been proven that under the leadership of another co-founder, CZ's wife He Yi, and new CEO Richard Teng, Binance has maintained a strong position.

In terms of trading volume and user scale, it still holds the top spot. CoinGecko data shows that Binance's 24-hour trading volume exceeds $17 billion, with monthly visits surpassing 53 million. CoinGecko's Q2 report indicates that Binance's market share in Q2 was approximately 44%, slightly lower than the same period last year, but still ranked first.

He Yi's role as "Binance's largest customer service" has been fully realized during CZ's absence. Compared to the CZ era, Binance has directly addressed almost every key point of market skepticism, providing answers to public opinion and contributing several thought-provoking pieces to the crypto market.

However, in the past year, controversies surrounding Binance have never ceased. In terms of business strategy, the explosive popularity of Bitcoin inscriptions at the end of last year has drawn many CEXs into a battle for traffic and Web3 wallets.

Facing rapidly changing new phenomena, He Yi revealed in an AMA that Binance has struggled to assess future trends, leading to insufficient investment. Binance has also faced criticism for not entering the Web3 wallet space sooner and for the subpar user experience.

Beyond business strategy, the biggest controversy Binance faced during CZ's absence has been regarding token listings.

From "girlfriend tokens" to VC tokens and meme tokens, Binance has repeatedly found itself in the eye of the storm, with He Yi responding to the listing debate at least five times through articles or AMAs.

The "girlfriend token" can be seen as a remnant of the CZ era. However, this year, Binance's entanglement with VC tokens and meme tokens has exposed a collective confusion within Binance and the crypto market.

Making money is no longer easy; the crypto narrative is starting to deflate.

VC tokens have driven the prevalence of high FDV and low circulating token models this year. These tokens generally experience price weakness after TGE. According to data compiled by crypto KOL @Ryanqyz_hodl, most tokens listed on Binance in 2024 saw significant declines after TGE.

Data source: @Ryanqyz_hodl

Whether it’s VC tokens, mini-games on TON, or memes, project development has become extreme, with everything aimed at getting listed on Binance.

However, when users cannot make money, criticism of Binance becomes inevitable. Binance subsequently took the lead in adjusting its listing strategy, prompting a collective reflection within the crypto market. The crypto community has come to realize that the industry has fallen into a vicious cycle of creating illusory stories and merely wanting to sell tokens.

Thus, while the discourse around high FDV tokens has quieted down, Binance's recent rush to list meme tokens in a bid for traffic has sparked controversy again. While memes are good, they cannot be just memes. When will the crypto market transition from a PVP (mutual destruction) model to a PPP (mutual assistance) model?

Everyone longs for the CZ era, but history rolls forward

As Binance and the entire crypto market find themselves in controversy and confusion, the Federal Reserve announces interest rate cuts, and CZ's return may inject new confidence and vitality into the crypto market. The activity of the BNB chain and the meme tokens related to CZ's release can be seen as a reflection of this.

Although CZ is still prohibited from participating in the daily operations or management of Binance, this founder, who has led Binance through seven years of glorious history, remains the largest shareholder and retains influence over Binance's future.

CZ's influence extends beyond Binance. Besides the new impact Binance itself may have on crypto after CZ's return, CZ, as one of the crypto icons, may also bring insights to the new crypto cycle with his global perspective and experience through various cycles.

However, for Binance and the crypto market after CZ's return, there are still numerous challenges ahead. The crypto cycle has changed, and the logic and gameplay are evolving.

CZ led Binance from a workshop to the world's largest crypto exchange during a period of rapid growth in crypto. Perhaps everyone reminisces about the wealth myths of hundredfold and thousandfold tokens brought by innovative models like IEO during the CZ era. But as He Yi lamented in her new article “If We Disagree, You Might Be Right”, this was more a result of the dual support of early niche markets and macroeconomic conditions.

In the year of CZ's absence, the crypto industry has reached a new critical juncture.

He Yi has repeatedly stated that the global economy has entered a new cycle, with worldwide consumption downgrading and more traditional players joining the gold rush. As the trading scale of traditional financial products related to crypto continues to stabilize and expand, while indeed larger players are entering, the manner of their arrival is not as imagined, with capital blindly taking over.

Moreover, crypto innovation still faces the need for balance or even compromise under the trend of compliance. Both Binance and the entire crypto market must navigate a more complex environment while seeking stability, innovation, and growth. The hundredfold and thousandfold growth of the CZ era may be harder to replicate.

But the other side of the coin is that after the bubble of merely narrating stories and selling tokens is burst, crypto may not just be about trading technology but returning to the essence of business and value-driven approaches. Blockchain technology may gradually establish itself in addressing the real needs of the majority, entering the lives of ordinary people.

With CZ's return, we look forward to Binance's continued pursuit of stability amid change and the relentless forward momentum of crypto.