A16Z-backed crypto unicorn Helium splits from Binance over delisting
Binance said Forbes it removes tokens to protect its users and periodically reviews “every digital asset we list to ensure it continues to meet a high level of standards.”
A token created by Helium, a high-profile crypto project considered one of the best use cases for Web3 technology, will be partially delisted from top cryptocurrency exchange Binance amid reports of revenue poor and misleading marketing at its parent company, as well as the network’s abandonment of its native blockchain last month.
In a blog post on Thursday, Binance said it would stop trading Helium Network Tokens, or HNTs, with multiple trading pairs over the next week, preventing token holders from trading HNTs for Bitcoins or other tokens. Binance has “strongly advised” people to close their positions or else it will “automatically settle and cancel all pending orders” regarding HNT and its trading pairs on October 12.
Users can continue to spot the trade with the HNT/Binance USD pair (Binance’s stablecoin, BUSD).
In a statement to ForbesBinance spokesperson Jessica Jung said the exchange periodically reviews “every digital asset we list to ensure it continues to meet a high level of standards. When a coin or token no longer meets this standard or there are changes in the industry, we are investigating further and possibly removing it to protect our users.”
In response, Maggie Philbin, spokesperson for the Helium Foundation, which runs the community, said in a statement to Forbes that “there is no reason for Binance to drop multiple HNT pairs. There has been no change in the integrity of HNT and it continues to meet all the standards set by the exchange.
Philbin continued, “There are dozens of other exchanges that continue to support HNT. We hope Binance will reverse course and list other HNT trading pairs soon.
Helium’s parent company, Nova Labs, which is backed by Andreessen Horowitz and Multicoin Capital, declined to comment on the filing.
Confused members of Helium’s Discord community peppered the company with demands for explanations following Binance’s announcement. “Is it safe to hold HNT in Binance or not?” a user wrote on Thursday. No Helium employee responded. Community members only received a terse response from a moderation bot: “No discussion of trades here, please see #rules.”
On a Discord server to discuss helium trading, members speculated that the change might be related to Binance’s recent decision to stop supporting some competing stablecoins. When asked if the two were related, Binance replied Forbes its action against the Helium token was unrelated.
Traders also questioned whether the move stemmed from a September scandal in which Binance mistakenly classified another of Helium’s less valuable tokens as HNT, causing 4.8 million HNT to be transferred to users at a loss. approximately $19 million. Community sleuths have speculated that Binance partially delisted Helium due to its threatened HNT liquidity, although it is unclear how Binance would recoup its losses by penalizing HNT trading.
Exchanges like Binance remove tokens for a number of reasons, sometimes after being notified of an investigation or enforcement by an agency like the Securities and Exchange Commission, said Carol Van Cleef, president of the Blockchain and Digital Assets Practice at the Bradley law firm. Helium radiation “is going to grab attention and make people wonder why,” she said. Forbes. The SEC did not respond to a request for comment.
Over the past year, major exchanges have cut tokens in light of controversy and government regulation. Binance suspended spot trading for LUNA in May, after the Terra Luna crash cost countless investors their life savings. And while the exchange once plotted to evade US regulators, according to a 2020 Forbes report, Binance has since opted to delist certain currencies considered securities by the SEC.
Binance also limited trading pairs for the Ooki Protocol on Thursday. Last month, the Commodity Futures Trading Commission (CFTC) accused the founders of Ooki and the governance DAO (decentralized autonomous agency) of numerous violations, including illegal trading of digital asset margins and failure to comply with the law. on bank secrecy. The regulator’s complaint extended in particular to members of the DAO, who received an unprecedented summons via the site’s chatbot. It is unknown why Ooki was similarly affected by the swap.
Binance’s decision follows an investigation published by Forbes last month, exposing previously undisclosed windfall earnings earned by Helium executives and insiders shortly after the network launched in 2019. The value of those earnings peaked at millions of dollars and was separate from symbolic shares already guaranteed to the company and its investors. At the same time, executives touted helium as an easy source of passive income, a kind of popular coin – calling it “The People’s Network”. Today, most users earn a few dollars a month. As we said Forbes“I could have used my money elsewhere and earned an income, not lost it after paying my electricity bill.”
Founded in 2013, Helium initially aimed to capitalize on the Internet of Things sector before moving into crypto in 2019. Its plan was to entice people to buy hotspots, which could transmit data for devices such as tracking stickers or smart mousetraps. By purchasing the $500 hardware from the company, members could theoretically recoup their investment by earning Helium Network Tokens in exchange for moving data across the network.
Despite raising over $250 million from investors like Andreessen Horowitz and Tiger Global, Forbes pointed out how Helium only generated $92,000 last year from network data transfers. Instead, most of the company’s revenue comes from new user signups.
Previously, Helium had also come under scrutiny for misrepresenting its customers, claiming that Salesforce and electric scooter company Lime were customers. Both companies have denied any relationship.
Currently, Helium is promoting a brand new business to its community. Known as Helium 5G, it aims to provide connection to 5G devices and has launched an associated crypto token, MOBILE, to support it.
Like other crypto projects, Helium could face impending regulatory headwinds, and over the past year, federal agencies have targeted the crypto industry from multiple sides. Last October, the Ministry of Justice created a national team specialized in the application of cryptocurrencies. The SEC and CFTC have taken on financial and community crypto investigations, respectively. And in September, even the White House released its own industry review and regulation framework.
“There have been rumors for months that a big crypto regulatory push is coming,” said Poppy Alexander, partner at Constantine Cannon, who represents SEC whistleblowers. Forbes. While the fruits of those efforts have yet to materialize, Alexander noted, federal law enforcement authorities are “very eager, smart and eager to get going.”