Helium, the A16Z-backed crypto unicorn, spars with Binance over delisting

Binance told Forbes it removes tokens to protect users, and periodically reviews “each digital asset we list to ensure it continues to meet a high level of standards.”

A token created by Helium, a much-hyped crypto project hailed as one of the best use cases of Web3 technology, will be partially removed from major cryptocurrency exchange Binance amid reports of poor earnings and misleading marketing at its parent company, as well as the network’s abandonment of its original blockchain last month.

In a blog post on Thursday, Binance said it would stop trading Helium Network Tokens, or HNT, with multiple trading pairs over the next week, effectively preventing token holders from exchanging HNT for Bitcoin or other tokens. Binance “strongly advises” people to close their positions or it would “automatically settle and cancel all pending orders” related to HNT and its trading pairs on October 12.

Users can continue to discover trading on the HNT/Binance USD (Binance stablecoin, BUSD) pair.

In a statement to ForbesBinance spokesperson Jessica Jung said the exchange periodically reviews “each digital asset we list to ensure it continues to meet a high level of standard. When a coin or token no longer meets this standard or there are changes in the industry, implementing We will conduct a more thorough review and potentially remove it to protect our users.”

In response, Scott Sigel, COO of the Helium Foundation, which manages the community, said in a statement Forbes that “there is no basis for Binance to remove more HNT pairs. There has been no change in the integrity of HNT, and it continues to meet all the standards set by the stock exchange.”

Sigel continued: “There are dozens of other exchanges that continue to support HNT. We hope Binance reverses course and re-lists the other HNT trading pairs soon.”

Nova Labs, whose founders created the Helium network, which is backed by the likes of Andreessen Horowitz and Multicoin Capital, declined to comment on the record.

Confused members of Helium’s Discord community peppered the company with requests for an explanation following the Binance 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 moderator bot: “No discussion of exchanges here, see #rules.”

On a Discord server to discuss Helium trading, members speculated that the change could be related to Binance’s recent decision to stop supporting certain competing stablecoins. When asked if the two were linked, Binance said Forbes the action against Helium’s token was unrelated.

Traders also wondered if the move stemmed from a September scandal in which Binance misclassified another of Helium’s less valuable tokens as HNT, causing the exchange to transfer 4.8 million HNT to users at a loss of roughly $19 million. Community experts have theorized that Binance partially removed Helium as a result of its threatened HNT liquidity, although it remains unclear how Binance would recoup its losses by penalizing HNT trading.

Exchanges such as Binance remove tokens for a number of reasons, sometimes after being informed of an investigation or enforcement by an agency such as the Securities and Exchange Commission, said Carol Van Cleef, head of the Blockchain and Digital Assets practice at the law firm Bradley. The delisting of Helium “is going to attract attention and make people question why,” she said Forbes. The SEC did not respond to a request for comment.

In the past year, major exchanges have restricted 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 savings. And while the exchange once planned to evade US regulators, according to a 2020 Forbes Following the report, Binance has since opted to remove some currencies that were deemed securities by the SEC.

Binance also limited the trading pairs for the Ooki protocol on Thursday. Last month, the Commodity Futures Trading Commission (CFTC) charged Ooki’s founders and management DAO (decentralized autonomous agency) with a number of violations, including illegal trading of digital assets and failure to comply with the Bank Secrecy Act. The regulator’s complaint particularly extended to DAO members, who were unprecedentedly served a subpoena via the site’s chatbot. It is unclear why Ooki was similarly affected by the exchange.

Binance’s move follows a survey published by Forbes last month revealed previously undisclosed windfalls earned by Helium executives and insiders shortly after the network’s launch in 2019. The value of those earnings topped millions of dollars, and were separate from token shares already guaranteed to the company and its investors. At the same time, executives touted Helium as a source of easy passive income, a sort of grassroots coin — calling it “The People’s Network.” Today, most users earn a few dollars per month. As one told Forbes“I could have spent my money elsewhere and actually gained some income, not lost it after I pay the utility bill.”

Founded in 2013, Helium initially aimed to capitalize on the Internet of Things sector before moving into crypto in 2019. The plan was to encourage people to buy hotspots, which could transmit data for devices such as tracking stickers or smart mousetraps. By purchasing the company’s hardware for US$500, members could theoretically recoup their investment by earning Helium Network Tokens in exchange for moving data across the network.

Despite raising more than $250 million from investors such as Andreessen Horowitz and Tiger Global, Forbes highlighted how Helium generated just $92,000 in the past year from network data transfers. Most of the company’s income has instead come from new user registrations.

Before that, Helium also faced scrutiny for misrepresenting its customers, claiming that Salesforce and e-scooter company Lime were customers. Both companies denied a relationship.

Currently, Helium is promoting a brand new venture to its community. Known as Helium 5G, it aims to provide connectivity to 5G devices and has launched an accompanying crypto token, MOBILE, to back it up.

Like other crypto projects, Helium may face impending regulatory headwinds, and over the past year, federal agencies have targeted the crypto industry from many angles. Last October, the Department of Justice established a specialized national cryptocurrency enforcement team. The SEC and CFTC have tackled financial and community crypto investigations, respectively. And in September, the White House even released its own framework for investigating and regulating the industry.

“There have been rumors now for months that a major regulatory push in the crypto space is coming,” said Poppy Alexander, a partner at Constantine Cannon, which represents SEC whistleblowers. Forbes. While the fruits of those efforts have yet to materialize, Alexander noted, federal enforcement officials are “very eager and smart and eager to go.”