The Skycoin Story: How Listing And Delisting Work In The Crypto World

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Listing on an exchange is an important milestone in the roadmap of any cryptocurrency project. Getting a coin listed on the best exchanges greatly increases its chances of success, as it provides an increase in value and better accessibility for investors. Gaining access to liquidity is vital to the success of any cryptocurrency. Bitcoin Cash’s listing on GDAX and Coinbase almost doubled the price of this cryptocurrency within 24 hours. 

The requirements are high: you need to have a competent team with great development skills and experience in the crypto sphere. You need considerable support from a community and a positive story. 

However, even if the project has this in spades, it still might not appear in the listings of major token exchanges, as is the case with Skycoin, one of the oldest participants in crypto space, which was co-founded by Brandon Smietana, a blockchain luminary who was among Bitcoin’s initial developers. Despite the fact that the company’s software and hardware products are among the most valuable on the market to this day, you won’t find its token listed on Binance.

Influence of exchange listing on coin prices

In 2017, hundreds of new digital tokens flooded the market thanks to the ICO phenomenon. This influx continues unabated even today, despite the fact that ICOs are already, in many ways, yesterday’s crowdfunding. Today, a token’s success is strongly tied to whether it gains recognition from exchanges, as ICOs have given way to IEOs – initial exchange offerings of tokens. However, many of the new digital tokens and currencies will never make it into the public eye because the major exchanges won’t list them. 

Without the support of large exchanges, buying and selling digital assets becomes an impossible task. Moreover, it is doubtful that anyone would want such an asset at all. Therefore, there is a clear correlation between the success of a cryptocurrency and the quantity and quality of the exchange listings in which it appears. On average, the value of a cryptocurrency increases by 25-30 percent after listing. This effect is often short-lived, and after the hype, the value of the coin begins to correct. 

For example, after experiencing the rollercoaster ride that affected nearly all tokens during the crypto craze of 2017, Skycoin’s token was trading in the $8 range, about 80 times higher than the 10 cents the project’s initial investors had paid. But with the announcement that Skycoin was to be listed on Binance, the token quickly rose to about $33, a fourfold increase, so it’s clear how important getting listed on a major exchange can be for a crypto project. 

What are the general and individual listing requirements? 

The listing process is based on a rigorous review and process that requires issuers to demonstrate the viability of their token and their business model. There are a few basics that any cryptocurrency must meet to get listed on an exchange. The core elements are having a strong project team, proven technological infrastructure, a working platform, and a legally compliant company. 

The crypto exchange with the highest trading volumes is Binance. Getting listed on it marks a serious milestone for any project, as this generally leads to an instant increase in token price. 

Smietana explained, 

“Binance is the world’s largest crypto exchange and a trading platform for buying and selling cryptocurrencies. It is highly desirable for cryptocurrencies to be listed on Binance.” 

The most important criteria for listing a cryptocurrency on Binance is the number of users, says the exchange’s CEO, Changpeng Zhao. “If a coin has a large number of users, then we will list it. This is an overwhelmingly important property,” he notes. While Binance receives hundreds of listing applications, very few actually qualify. 

Tokens must be issued in accordance with the law and not have been the subject of any legal reviews for violations. 

Major crypto exchanges don’t list minor tokens, as they earn mostly from trading volume, not listings. This is one of the major problems that many projects do not understand. They should start by building a community. And this means not 500 or 10,000 people in a Telegram channel, but a much larger audience. 

Why do exchanges delist cryptos? 

• The project is deemed to be a fraud or scam
•     Bear Markets
• Cycle of hype, pump, and dump, followed by depressed token price
• The SEC recognizes tokens as securities
• Vulnerabilities - weak hashrates, susceptibility to 51% attack
• Maintenance of the coin is complex and time consuming (full node support, synchronization), while its trading volume is low
• Inactive team (does not respond to correspondence, little social network management)
• Exchange suspects the project of dubious activities 

Are all delisted companies unhealthy? 

Not always. Because exchanges are extremely sensitive to bad publicity, companies in the crypto sphere can find themselves the object of extortion schemes launched by people who attempt to capitalize on their success by threatening to spread false information about the project. As noted above, for exchanges, the bottom line is generating turnover, so they fear any news that might scare users away. If an exchange receives enough negative comments, that may be enough for exchanges to delist a project, regardless of its strengths or level of expertise. The veracity of the claims is often irrelevant if an exchange thinks the allegations might hurt their business, so they rarely do the due diligence to confirm whether the rumors are true or not. 

Skycoin co-founder Brandon Smietana confirms: 

“The reality is that there are some really nasty groups on the internet that are targeting cryptocurrency companies because it’s an easy way to make money. They're manipulating the market. They're extorting people.” 

In January of 2018, Skycoin contracted a company to revamp its website, perform search engine optimization, and generate positive publicity. Shortly thereafter, this marketing team announced that they had uncovered a scheme by an unknown third party to damage Skycoin’s SEO rankings and reputation by linking pornographic blogs and other harmful spam content to the company’s website. They requested additional payment to ward of the attack. 

Later, in early February, these demands were increased, and the contractor’s head, Bradford Stephens demanded that Skycoin pay $100,000 per month to protect internet traffic to Skycoin’s site, later increasing this demand to $300,000 per month. 

Smietana shared the first-hand experience his Singapore-based company had in dealing with the conmen: 

“So, they were running this extortion racket. What happened was they basically started attacking Siacoin and Substratum. And they went to Substratum and said: ‘Hey! Skycoin's attacking you! You want to get revenge?’ And they got $100,000 per month from Substratum and Siacoin to attack us, but we had nothing to do with it. Then they came to us and said: ‘Hey, pay as $300,000 per month for protection money, and we'll leave you alone.’ 

However, Skycoin had already learned that the initiators of the attacks on its site were not some third party, but the marketing team itself, and initially refused to make the payments. 

Fearing for his company’s financial future, Smietana eventually capitulated to the extortionists’ demands and made the first of three protection payments. A contributing factor to this decision was allusions to Eastern European crime gangs and “unconventional debt collection” methods made by Stephen’s associate, Harrison Gevirtz. 

However, in late February, Skycoin terminated its relationship with Stephen’s under pressure from the company’s board, which was concerned about alleged criminal connections of some of his marketing company’s members.

At that point, knowing that Skycoin was about to be picked up by the Bittrex exchange in late February, Stephens told Smietana that unless the company paid his team $30,000,000 in Bitcoin and 1,000,000 USD, he would go to Bittrex and provide them with damaging information that would prevent the listing, warning that failure to comply would result in Skycoin's destruction and the price of Skycoin being driven to zero.

Smietana refused to pay, and Stephens did, in fact, provide untrue information to Bittrex which ultimately prevented Skycoin from being listed on the exchange. 

But it didn’t stop there. 

In June of 2020, this group embarked upon another scheme to extort still more money from Skycoin, threatening to get the company’s token delisted from Binance, while destroying its reputation and sinking its token’s value, if it refused to pay. 

The company refused. 

Smietana recalls: 

“What happened with Binance is we had these people come and say, ‘Give us 50 Bitcoin or we're going to get you delisted,’ and I told them “To hell with you! We're not paying you $2 million!’ And this is a group of people that has been attacking us for 4 years now.” 

Subsequently, the group solicited other individuals to make false complaints against Skycoin that included allegations of drug use and criminal activity by Smietana. They even publicly discussed what kind of false reports could get Skycoin delisting from Binance. 

The extortionists scheme was ultimately successful, and Skycoin was delisted from Binance on November 5, 2021. 

Afterwards, one of the co-conspirators congratulated all those involved in public messages reading “Nice work team” and “PARTY TIME,” and posted a photo depicting Skycoin as New York’s World Trade Center just before its demolition. 

To seek compensation for the damage caused by the delisting from Binance and the group’s other nefarious activities, Skycoin has recently filed a lawsuit (Skycoin v. Stephens, 22-cv-00708, U.S. District Court, Northern District of Illinois, Chicago) against the extortionists.

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.