Decentralized Finance (DeFi) projects might have been the hottest trend of this year, but a number of these projects have turned out to be another pump and dump investment. Pointing fingers at one such project, Jay Hao, CEO of crypto exchange OKEx, has called out Binance CEO Changpeng Zhao for listing certain risky DeFi projects.
In a series of tweets on September 15, Hao remarked that Binance’s support for any and every popular DeFi project is a risky feat as many of these projects often tend to collapse.
He also said that Binance’s decentralized exchange platform Binance Smart Chain (BSC) is a centralized entity, highlighting that it is fully controlled by a single team.
Hao stressed on a particular project dubbed BakerySwap, a DeFi protocol that was developed on BSC, and collapsed in just 12 hours from launch, resulting in severe protests by investors in China and some other places.
“Reminder to be careful when farming on Binance Smart Chain. As I said, it’s managed by only one team & is not decentralized. Built on #BSC, #BakerySwap caused huge losses for many retail investors <12h after mining began, which led to protests against BSC in China & elsewhere,” he wrote.
The thread is a follow up on some previous tweets in which Hao had criticized Zhao and Binance co-founder Yi He, for the exchange’s swift listing of SUSHI without proper audit.
According to Hao, this is “irresponsible behaviour” on the part for Zhao, and has “damaged the crypto community’s trust and caused #DeFi to regress.”
In another tweet, he added:
“Those financial losses are a result of blind trust in #Binance. Despite @heyibinance’s claims that projects on BSC must pass all security audits, $BAKE still plunged leading @cz_binance to delete his BakerySwap endorsement tweet ytd just like he did with #SushiSwap previously.”
However, it must be noted that Binance and OKEx both listed the SUSHI token on the same day.
The DeFi tren has put centralized exchanges in a tight spot where they must choose to either shun these risky DeFi tokens or lose customers to popular decentralized exchanges like Uniswap. Listing these tokens too soon has and will cause damage to the crypto ecosystem.
There hasn’t been any response from both Zhao and Binance.