Binance Rumors Spark Up Around 4 Coins Getting Removed to Avoid a Low Liquidity Fiasco
Each of the 4 projects became delisted for a different reason, and Binance didn’t explicitly say why. Immediately following the delisting, all 4 projects took a beating in price action.
These tokens were listed on Binance about six months ago and as everybody in the industry knows listing fees have been a major source of revenue for the exchanges. There were rumors that in the spring of 2018 companies were being charged up to a million dollars per listing.
So Binance has been paid upfront for these services and one can say that 6 months ago these projects were not necessarily world beaters, yet they were listed for no other consideration but the listing fee.
Consumer protection does not seem like it was a factor and now delisting these tokens seems strange in a way. The listing agreements for these tokens had clauses or clawbacks connected that 6-month duration.
It is a sign of how quickly this industry is moving forward and maturing. 6 months ago, the listing game was all the rage and many tokens that had no business to be listed anywhere let alone offered to the public were traded on multiple exchanges.
Today the industry is increasingly legitimizing and Binance is leading the change by taking on the task of reviewing the products they list and trying to protect their customers by making the listing process more transparent. Donating all listing fees to a charity is just a proactive way of dealing with the delisting of these 4 unfortunate coins.
It shouldn’t surprise anyone if Binance reverses that policy in the future and starts taking the listing revenue in again at some point. The point is that the listing process will be more disciplined and coin due diligence will be more rigorous and transparent. This is the sign of a swiftly evolving market.
But what do you do if you are holding thinly trading tokens?
First of all, investors should be doing a much better job of analyzing tokens, and it doesn’t matter if these are utility or security token as these are investment instruments. So investors need to dig in, these are at best very risky startups, so check out the teams, market opportunity, product fit and so on.
If people are holding a thinly traded instrument the selling of these tokens is often hard as it is too easy to move the market by “crossing the spread” and not in a good direction.
Leaving large limit orders is also not a good idea. That order becomes visible to other market participants and people will move the market away from your order in a jiffy.