Binance's co-founder Yi He provided insights into the cryptocurrency exchange's token listing process, addressing concerns following the volatile trading of the Test (TST) token. The token's market capitalization surged to nearly $500 million before experiencing a significant drop.

Centralized exchanges (CEXs) like Binance play a pivotal role in how retail cryptocurrency investors allocate their capital. Listings on these platforms often lead to increased investor demand and attention for the tokens. Binance's primary listing criterion is the token's return on investment (ROI), which is assessed by comparing the average price on its first day of trading to its quarterly performance on other CEXs.

In addition to ROI, Binance evaluates a project's capacity to innovate and attract new users to the blockchain industry, potentially converting them into dedicated users. The third criterion focuses on tokens that have created a notable buzz in the market and have shown strong performance on other major exchanges. These tokens must have a compelling technological appeal to avoid Binance losing market share if they are not listed on the platform.

These clarifications from He come in the wake of comments from Changpeng Zhao, co-founder and former CEO of Binance, who acknowledged issues with the exchange's listing process. Zhao pointed out that arbitrage opportunities exploited by decentralized exchange (DEX) traders could lead to poor token performance post-listing.

DEXs are often used by seasoned traders to identify emerging cryptocurrencies before they are announced for CEX listing, which can act as a signal to buy and then sell the token after its CEX debut, creating downward pressure on the price.

In terms of regulatory compliance, He stated that Binance has strict measures in place. The exchange's internal investigations have led to the discovery of over 120 cases of misconduct, resulting in the termination of 60 employees. The majority of these cases did not involve insider trading but rather issues such as accepting bribes or misappropriating company funds.

The recent attention to Binance's listing criteria was sparked by the TST token, which was initially part of a tutorial for the BNB Chain but gained traction as a meme token.

The TST token's market cap reached a high of $489 million on February 9, according to CoinMarketCap, before plunging by over 50% to its current valuation of $192 million. The token was inadvertently revealed in a BNB Chain tutorial video, which was not intended as an endorsement, but led to promotional activities by influencer communities in China.

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