CZ Dismisses Centralization Fears Amid Scrutiny Over Binance’s Grip on USD1 Stablecoin
Binance is making headlines on social media for a number of causes. Among them, a Forbes report revealed that the trade and its customers management the overwhelming majority of USD1, a stablecoin issued by World Liberty Financial (WLFI).
With the WLFI enterprise linked to US President Donald Trump and his household, the disclosure has sparked debate over focus danger, trade affect, and the rising overlap between crypto markets and politics.
Binance’s USD1 Dominance Rekindles Debate Over Stablecoin Centralization
A February 9 Forbes investigation discovered that Binance holds roughly 87% of USD1’s circulating provide—round $4.7 billion out of roughly $5.4 billion in complete.
According to the report, this represents the best single-exchange focus recorded amongst main stablecoins. Blockchain analytics knowledge from Arkham Intelligence corroborates this knowledge.
The findings gas discussions about whether or not such a high degree of focus might create systemic dangers or undermine the decentralization narrative usually related to stablecoins.
CZ Pushes Back on Centralization Narrative
Changpeng Zhao (CZ), the founder and former CEO of Binance, responded publicly to the controversy, dismissing the issues as overstated. In posts on X (Twitter), CZ argued that Binance traditionally holds giant shares of many stablecoins merely due to its scale as the largest exchange.
“Binance (customers) maintain the most important % of most stablecoins (USDT, USDC, USD1, U … you identify it) in comparison with all different CEXs. Not information,” wrote CZ.
Further, the Binance government famous that when measuring centralized trade holdings broadly, Binance usually accounts for roughly 60–70% throughout a number of belongings.
Supporters echoed that view, arguing that the belongings largely belong to clients slightly than the trade itself, and that high concentrations on a dominant buying and selling venue aren’t uncommon in crypto markets.
Political Links Add Fuel to the Debate
USD1’s ties to World Liberty Financial have amplified the controversy. WLFI, launched in 2024, lists Trump as co-founder emeritus alongside Donald Trump Jr., Eric Trump, and Barron Trump.
A Trump-affiliated entity reportedly owns a big stake within the firm, and monetary disclosures present Trump earned tens of hundreds of thousands of {dollars} from the enterprise.
The Forbes report additionally famous that promotions tied to USD1 might have contributed to the focus. In late January, Binance hosted campaigns and incentives linked to WLFI tokens, together with distributions designed to reward USD1 holders. Such promotions can shortly improve liquidity on a single platform, notably when paired with new buying and selling pairs and advertising and marketing efforts.
These developments have led some analysts to query whether or not trade incentives can form the distribution of stablecoins greater than natural market demand.
Analysts Warn of Concentration Risks
The basic sentiment is that heavy focus at a single trade introduces theoretical dangers, even when speedy threats to stability are restricted.
These dangers might embrace counterparty publicity in excessive situations or the potential for exchanges to exert affect over liquidity and market construction.
Independent crypto researcher Molly White described the focus as uncommon, although not fully stunning given Binance’s function in selling USD1.
She famous that high focus can create leverage dynamics and raises questions on possession transparency in giant exchange-held balances.
Others had been extra essential. Former SEC adviser Corey Frayer argued that the construction and distribution of USD1 increase broader issues concerning the stablecoin’s objective and governance, in addition to the identities of main holders behind giant trade balances.
“USD1 was by no means meant to be an actual stablecoin,” Forbes reported, citing Frayer.
Binance and World Liberty Financial have each denied that the focus implies management or undue affect.
Binance has described its involvement as restricted to plain itemizing, infrastructure, and market-access providers. Meanwhile, WLFI representatives have characterised trade listings as a standard distribution channel.
Nevertheless, the episode has reignited a deeper trade debate: whether or not stablecoins can actually operate as impartial monetary infrastructure when liquidity and person exercise are closely concentrated on centralized platforms.
The publish CZ Dismisses Centralization Fears Amid Scrutiny Over Binance’s Grip on USD1 Stablecoin appeared first on BeInCrypto.