By
Chimamanda U. Martha
April 19th, 2024
Binance recently explained to delisted project Mithril that a clause in their contract entitles it to Mithril’s initial insurance deposit.
Recently delisted Binance social network project Mithril (MITH) has asked the exchange to refund its initial insurance deposit. Mithril said it deposited 200,000 Binance Coins (BNB) as insurance for listing on Binance and now wants them back. However, the exchange’s outspoken CEO Changpeng Zhao recently came out to address those claims and provide more clarity regarding the listing terms.
Sharing a screenshot of Binance’s contract with Mithril on Twitter, Zhao explained that the exchange has the right to deduct the insurance fund. According to the Binance CEO, the deductible amount could be a partial sum or 100% of the insurance fund as an additional fee. Zhao further explained that the clause is exercisable if MITH’s listed token price falls below a certain threshold. Zhao’s Twitter message, which accompanied his screenshot post, read:
“I reviewed this after seeing your post. Here is the contract clause for your (and community) reference. We usually observe confidentiality, until you broke it. The Insurance Deposit is there to encourage builders to continue to build.”
In addition, the Binance CEO continued:
“Your token price is way below the trigger levels. Reading the comments. Your website is offline. You haven’t tweeted or updated your community for almost 2 years. I believe our team has made the right decision and acted fully within our right to do so. Regards.”
Zhao’s response tweets came today.
Crypto Community Weighs in on Binance Twitter Exchange with Delisted Mithril
Zhao’s Twitter exchange with Mithril did not go unnoticed by the larger Twitter community. Some observers pointed out that the delisted crypto project was essentially non-existent while on Binance. These observers also viewed the listing insurance fee of 200K BNB ($2 million) as a small price for Mithril to pay for its inactivity. The ‘listing sum’ at the time of the deposit favorably compares to the crypto project’s current market value of $53 million.
However, the other spectrum of the crypto community questioned Binance’s commercially-driven approach regarding the initial listing. These observers did not think it was fair for the prominent exchange to demand security insurance in BNB from projects looking to list on the exchange. Furthermore, one Twitter user questioned Binance’s focus on price for delisting. According to this observer, such a focus might compel projects to artificially inflate the price every time it dips below the “trigger price.”
The user further stated that market conditions sometimes push token value lower. However, the issue of artificially pumping the price when this happens suggests a manipulated and disingenuous environment.
As of press time, Binance was yet to address any of these observer concerns regarding the delisted Mithril.
Binance Proof-of-Reserve Audit Stokes Concerns
Meanwhile, Binance’s proof-of-reserve audit has been the subject of numerous discussions in the financial space. Several financial experts recently voiced concerns over the company’s released audit. However, crypto analytic firm CryptoQuant recently attempted to demystify the skepticism by stating that Binance’s reserve on-chain data does not resemble FTX.