Binance Shunned from Forbes' Top 20: CZ's Impending Jail Term a Factor?

The global surge in cryptocurrency adoption continues unabated, drawing in a diverse array of investors into the realm of digital assets.

With this escalating demand for cryptocurrencies, there arises a parallel necessity for trustworthy and robust exchanges to facilitate the seamless buying, selling, and trading of these digital currencies.

Forbes Ranked the Top 20 Most Trustworthy Crypto Exchanges in 2024

Forbes' 2024 list underwent an extensive process, spanning several months, to identify the top cryptocurrency exchanges.

They began by scrutinising 646 exchanges sourced from platforms like CoinMarketCap and CryptoCompare.

A staggering 74% were disqualified due to inadequate assets under custody.

Further vetting involved examining product offerings, trading and traffic volumes, and regulatory backgrounds, if any.

Each exchange on the shortlist was assessed across nine categories, graded on a scale of one to 10.

These scores were then aggregated and weighted according to the percentages specified in the ranking table, yielding a composite final score.

Decentralised exchanges were excluded as they operate without human intervention.

Forbes explained the ranking's methodology:

“In an industry that is largely unregulated and unaudited and in which hacks are common, the most important job for exchanges is to keep tokens safe for investors. Forbes’ methodology reflects this goal. Each exchange had to meet a high regulatory threshold for inclusion, earning at least seven out of 10 possible points."

Using this methodology, the ranking table is as seen below.

Source: Forbes' The World's Best Crypto Exchanges And Marketplaces

In March 2022, Forbes conducted a ranking of crypto exchanges amidst a landscape where CoinGecko listed around 6,500 tokens.

Presently, the crypto market has expanded significantly, with over 13,000 tokens available.

Forbes streamlined their list from 60 companies in 2022 to just 20, prioritising criteria such as compliance, solvency, and security.

Coinbase Emerged the Victor

In the aftermath of significant upheavals, such as the legal proceedings involving industry giants like Sam Bankman-Fried (SBF) and Changpeng Zhao (CZ), the cryptocurrency exchange landscape is evolving towards greater transparency and compliance.

In this shifting terrain, Coinbase, a publicly traded entity known not just for its exchange services but also as a premier cryptocurrency custodian, emerges as a beacon of trustworthiness, spearheading the list of the industry's top 20 exchanges.

Holding 13% of the global supply of bitcoin and ethereum, along with 40% of all crypto assets on exchanges, underscores its reputation for trustworthiness.

Forbes noted in the ranking:

“Among pure crypto exchanges, Coinbase is clearly the favoured custodian for traditional institutions and it has benefited from the new spot bitcoin ETFs, eight of which use it to hold their crypto. At the end of the first quarter bitcoin and ether in custody rose to $219 billion. Retail fees are relatively high, averaging nearly 1.7%. Coinbase is the largest US crypto exchange by trading volume and largest globally by assets held in custody."

Despite regulatory challenges, such as ongoing disputes with the Securities and Exchange Commission (SEC) which considers almost all digital currencies other than bitcoin to be securities, Coinbase maintains a high regulatory score.

While these issues are civil rather than criminal, Coinbase excels in audit quality and enjoys strong institutional investor confidence, mirroring its top position on the 2022 list.

Why is Binance Missing from Forbes' List?

Despite maintaining its status as the largest cryptocurrency exchange globally in terms of daily trading volume, Binance's absence from the 2024 Forbes ranking raises questions.

Source: CoinMarketCap

Forbes cites legal and regulatory issues as the primary reasons for this omission.

The case being: Binance, under the leadership of CZ, faced significant legal challenges in the US, resulting in guilty pleas for violating anti-money laundering laws (AML), engaging in unlicensed money transmission, and breaching sanctions regulations.

As part of the settlement, the exchange agreed to pay $4.3 billion in restitution.

CZ himself acknowledged a failure to implement an effective AML programme at Binance, leading to a fine of $50 million and a four-month prison sentence.

Over the past three years, Binance has faced expulsion from at least 17 countries, including major markets like India, the UK, and Japan.

One key concern contributing to its reputational challenges is its lack of a fixed headquarters, leaving much of its operations without a home regulator.

Why is CZ Still Not in Prison Yet?

Despite receiving a four-month sentence during his hearing on 30 April, CZ has yet to begin serving his prison term due to procedural formalities within the criminal justice system.

While the judge's judgment mandates his surrender for imprisonment as notified by the Probation or Pretrial Services Office, such notification has not been issued.

This delay underscores the protection afforded by the Fifth Amendment of the US Constitution, ensuring due process for all individuals within its jurisdiction, regardless of citizenship status.

This constitutional safeguard, backed by centuries of legal interpretation, guarantees redress for anyone facing deprivation of life, liberty, or property without lawful due process.

In addition, CZ has assembled an impressive legal team comprising seven attorneys from renowned law firms such as Latham & Watkins, Quinn Emanuel Urquhart & Sullivan, and Davis Wright Tremaine.

This formidable ensemble, backed by paralegal and support staff, has diligently explored every legal avenue to delay the commencement of his prison term, affording him ample time for preparation.

However, despite these efforts, CZ's eventual incarceration hinges on notification from the Probation or Pretrial Services Office of the US Bureau of Prisons.

The office is conducting statutory reviews to ensure compliance with CZ's individual circumstances, thereby upholding Constitutional due process.