Changpeng Zhao, CEO and founder of the top-end Binance Crypto Exchange, stressed that the token exchange offers are no less susceptible to regulatory obstacles than their predecessors on the original offer of coins (ICO).
The CEO, better known in the industry as CZ, expressed his opinion in an interview with Bloomberg on April 10.
As previously reported, the so-called initial exchange offers (IEO) have recently emerged as an alternative token offer model, in which centralized crypto-exchange acts as a form of underwriter. The exchange usually sells and allegedly checks both the projects themselves and potential investors.
In his interview with CZ, he emphasized that, while IEO can indeed offer the benefits of third-party due diligence on projects, regulatory compliance is no less burdensome for a new proposal model than for ICO:
“Regulatory compliance does not change whether you conduct ICO or IEO. If you release a token that represents your company's stock, then this is protection (in most countries), and you need to work on compliance. ”
He also corrected the story that Binance itself took the lead in the concept of IEO, noting that he did not know about the roots of the new term “IEO” and that the Binance launch panel did not formally present itself as such. He added:
“Back in 2017, when ICO was hotly debated, there were other“ centralized ”ICO sites. We borrowed the idea from there. Initial sales, facilitated by exchange, is not a new concept. The only minor tweak is the use of cryptocurrency instead of fiat. ”
As reported, in January of this year, the Binance Launchpad token sales platform hosted a loud sale of BitTorrent tokens based on Tron (BTT), followed by another IEO for AI and the draft Fetch.AI smart contract in February and also for Celer in March.
In mid-March, a crypto exchanger with a Bittrex counterparty based in Malta canceled its first sale of IEO tokens just two days after its announcement. He later spent another introductory IEO in April.
Earlier this week, industry critics and advisors weighed together the potential shortcomings of the IEO trend. One securities lawyer noted that a model placed on the stock exchange could make regulators even more inclined to consider offers to be sales of securities. Others pointed to the paradox of introducing middlemen into a space that values decentralization, and also criticizes exchanges for allegedly using IEO as an opportunity to stimulate sales and use of their own tokens.