As if investors did not have enough to worry about when they choose to invest in new digital tokens, KuCoin, a cryptocurrency exchange operating out of Singapore, announced that it will be delisting ten coins on its exchange for noncompliance with its Special Treatment Rule framework. The company notes that this framework is “designed to ensure that only projects that meet and maintain certain criteria are listed on the platform.”
For experienced investors in the crypto space, this announcement may have appeared routine, but, for the uninformed, the delisting process may have come as a shock. It is employed quite often by exchanges to protect their own reputations. The last thing an exchange needs is to enable a fraudulent ICO token to spread its influence or for an incompetent management team to do the same thing. Exchanges that elect to distinguish themselves from the competition by offering trading status to lesser-known coins must continually monitor these programs to determine if continued listing is warranted.
It may come as a surprise, but current estimates are that “70% of ICO tokens are not exchange listed and probably never will be.” The primary reason may be cost. Today’s exchanges, especially the larger ones, can charge anywhere from $100,000 to several million dollars to acquire listing status. According to one ICO rating company report: “Only 22% of ICOs that completed in Q1 of this year (2018) were able to have their token listed”.
Each exchange has its own published standards for maintaining listing status, once it is successfully obtained. A typical list of violations that could result in delisting follows:
- Struggling or non-existent business activity in the last three months
- Low liquidity for a set period
- Bankruptcy, insolvency or other financial problems
- Deviations from project whitepapers
- Lack of progress communication on the project’s website
- Incomplete, misleading or untrue information disclosure
- Failing to submit an update reported in accordance with the exchange’s requirements
- Failing an audit by the exchange
- Any act that is malicious to the exchange
- A high chance of the project team disbanding
- Involvement of project team members in questionable activities and investigations regarding illegal activities, wash trading, insider trading, or market manipulation
- Any other situation that might be determined by the platform deemed risky for its customers or its reputation.
As for KuCoin’s delisted tokens, here is the list:
- Jibrel Network (JNT)
- WePower (WPR)
- Modum (MOD)
- EthLend (LEND)
- STK (STK)
- Asch (XAS)
- Bread (BRD)
- BitClave (CAT)
- Mobius (MOBI)
- Bitcoin Gold (BTG)
KuCoin also delisted six coins near the end of November, the same month that it was reported that KuCoin had “successfully completed a $20 million Series A funding round led by IDG Capital, Matrix Partners and Neo Global Capital.” If the firm intends to expand its influence in the Asia-Pacific region, then, perhaps, some housecleaning needed to take place.