How an Exchange Abused its Power (while another became a role model)
For most service providers in the cryptocurrency space, the general advancement of the ecosystem rarely exceeds the importance of individual interest. This reality extends from fresh industry players all the way to major exchanges.
A recent event offered a rare public highlight of an exchange that went out of its way to cripple a fledging blockchain startup.
A Mindset Problem
DUO Network, a project that aims to create a decentralized market for cryptocurrency derivatives, held its token sale about a month ago. The project earned a primary listing on BitMax but was soon offered an additional free listing on MXC exchange. For any tokenized project, additional listings are an opportunity for exposure and greater token liquidity; naturally, DUO Network’s team accepted MXC’s offer.
A few days ago, however, MXC reached out to DUO Network’s team. The exchange wanted the project to pay up for service fees that were never agreed upon at the time of the free listing. MXC threatened a delisting of DUO tokens if the team did not pay up.
The reason MXC exchange had waited so long to demand fees is because DUO Network’s private sale tokens are about to be unlocked soon. At such a critical stage for the project’s token metrics, a delisting can have an extreme negative shock on both liquidity and community confidence. Demanding payment at such a point would typically push most startup teams to give in to the exchange’s demand.
However, DUO Network’s team managed to gain incredible support from BitMax and so managed the confidence to rub aside MXC’s demands.
The Outcome
MXC exchange delisted DUO Network; the immediate result was a steep drop in the price of DUO tokens. However, in the day that followed, BitMax’s team took a strong supporting stance for DUO Network.
Soon after, DUO Network’s team made a decisive move to buy 20% of the circulating DUO tokens from the secondary market and lock them up. The result of these two factors led to a sharp price recovery.
While DUO Network has had the support of a major exchange and has thus been able to withstand the threat of a delisting, most other startups listed on MXC cannot relate. The typical project receives a listing on just one major exchange; this means if MXC were to demand additional fees from the projects listed on it, most would likely comply as the alternative would be a sharp drop in token value with little sight of recovery options.
While there's nothing wrong with charging fees for a service, forcing a service upon a startup and then requesting a fee for it in a time of vulnerability is a horrible display of exploitation from a position of power. Such a mindset offers no value to the general productivity and improvement of the blockchain ecosystem; rather, it limits the growth of the space by impeding upon and thwarting the impact of others' positive efforts.
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good coincidence that i have just added bitmax to secure no kyc exchanges list yesterday https://steemit.com/bitcoin/@kingscrown/changes-on-anonymous-exchanges-list-bitmax-added i like bitmax too
Yes, thanks for sharing this list, quite useful for me!!
Thanks for sharing the list. :)
This is cool. But Is not abount exchange, what matters is privacy. One privacy wallet is better than 50 exchanges without security. This is why i so admire veil platform. It has its users at heart. Veil wallet is uncompromised. I think each exchange should adopt veil security strategies
Hi, I think the MXC play went wrong. However, there should always be this type of events, to create a background of how these large opportunist mafias manage to lead large platforms. Let's not forget that it operates jointly with the main quantitative trading teams of Wall Street in Europe and Japan. Always such a monster will try to equalize, and then take advantage. Well for the support of BitMax, which bear some of the weight of those greedy decisions.
So MXC Exchange whose name I haven't heard up until now was pretty much Abusing their Power and threatening Projects for some quick Cash. Sounds like a D*** Move to me.
Unfair strategies, end up crushed by better companies.
The wisdom I caught from this is the buying back 20% of the coin to cause scarcity. That's so ingenious of them. Can Steem witness and other bug whales do that? Will it work?
I also got to know from @kawaiicrush / @kawaicrush that top 20% of witness on this chain are powering down heavily.
The delisting of coin and the drama wasn't a surprise to me, I've seen it happen to many coins.
Why don't the founders sue MXC?
I am sure this is not legal
Who cares about legality in the crypto sphere?
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He might be able to, but it might take a long time and there are also still unclear regulations for some countries about cryptocurrency. And yes I agree with Luegen, legality is still something that is not seen important for some people now
I was impressed by BitMax's behavior and how it enabled a new coin to beat off a clear attempt at extortion -- we need more of that kind of behavior all across finance both of fiat and of crypto.
@hatu,I feel very bad about mxc
@hatu, It was really unfortunate to see these kind of games are happening in the Ecosystem. But at the same time we got to see some great communities and Exchanges who came forward to back DUO Network.
No matter in which aspect of life we see both Light and Darkness Situations. Thank you so much for letting us know about this and it's really empowering post. Stay blessed.
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