(MENAFN - ABN Newswire)
With so many cryptocurrency exchanges appearing on an almost daily basis, the average person, or not so average if you are a Crypto Enthusiast, can be overwhelmed by the sheer number.
This creates a challenge to qualify their place in the hierarchy of worth. (CoinMarketCap being the centrepiece).
Often new cryptocurrency exchanges are located in obscure places where regulation is not mature, and this can lead to malpractice by the exchange creators.
Quite often the only form of communication a Token Issuer or Token Trader may have with these exchanges is via their social media channels. These channels are moderated by the members of the exchange and they have full control of the dialog, and even full control of the access of participants in those channels.
Without regulatory bodies that oversee the activities of these exchanges, there is no mandate for clear and accountable channels of communication, let alone operation or those exchanges.
Token Issuers must be able to "trust" to a large degree, their token in the hands of Exchanges, and if it goes bad, it can go terribly bad.
As an example, say you found out from your community that your new Token had suddenly appeared on an exchange (let's call it Exchange A). It is live, and it is trading, and as the Token Creator you were unaware.
Perhaps surprised at the initiative of a generous exchange operator, you may feel that this is a good thing, and that someone had recognised your Token as a great choice for listing.
As time progressed, you become annoyed that the robotic trading occurring on your newly listed token was driving the price down. You test this by making a buy trade, and you immediately see a sell (ask) order appear at a lower value than that you just bought.
You decide that you will ask the exchange to remove the robotic behaviour, but they respond that they are helping by giving you a healthy "K" line, which is interpreted as volume and liquidity. Partly satisfied you decide to allow this to continue.
As your token is now trading with increasing artificial volumes you begin to find new exchanges for your Token and list successfully, and happily you find your Token pricing and volume on Cryptocurrency comparison sites.
Then the Slide.
You begin to notice that holders of your Token are not being able to withdraw from Exchange A, and the responses from the only point of contact, their social media channel, become vague and intermittent.
Then to your surprise, Exchange A decides to remove the robotic trading that has been driving volumes up consistently since they listed it. All of a sudden there is a drop back to a realistic level of activity, but that is not what the token holders see.
Partially unaware that Exchange A has been trading the token robotically, the holders of your Token start to panic, seeing the dramatic drop in volume, and start to sell. Your support email and support social media channels become jammed with your token holders trying to understand why your token now looks like a scam coin, with a rapidly decaying market value.
Now, this is where the real fun starts.
You approach Exchange A, understanding that your token is now falling quickly in value and reputation, and you ask Exchange A to delist the Token.
A great outcome in this terrible situation, is that they agree. They Delist your Token and release your funds.
The worst outcome, is they cut communication, refuse to delist the Token, refuse to release your funds, and meanwhile you attempt to manage the damage and explain that to your token holders. As your demands are no longer tolerated by the administrators of the rogue exhange's social media channel, your are banned from the only point of contact you have with them!
In a world where the word "scammers" is repeated constantly due to the deceptive nature of some exchange operators, and indeed some coin issuers, one must wonder when and how the reins will be pulled to halt this rogue activity. In the meantime, if you are listing your assets on new exchanges, take heed that strong lines of accountability and communication are one thing that you must establish.
About the Author:
Tim Mckinnon is CEO of GoldFund.io, an Australian based cryptocurrency token that is used in a Gold Mining and Commodities ecosystem.
Dcoin trading platform is the world's first financial industry-standard digital assets and derivatives trading platform that mainly provides cryptocurrency trading services for Bitcoin, Ethereum, Lite Coin and etc. Dcoin is founded by blockchain and cryptocurrency enthusiasts with core members from Google, Baidu, 360 and other world renowned IT companies. Dcoin is operated by Swiss company, Davox Technology AG with operation centers in Switzerland and South Korea.
Dcoin trading platform upholds the value of being transparent, open for all to participate, and share the value of blockchain for all to invest in digital assets. To protect investors' rights and interest, Dcoin strictly examines and verifies all of the cryptocurrencies that are available for trading on the platform and cooperate with cryptocurrency developers to ensure more growth to the investment.
The main goal for Dcoin is to provide a quick, simple and secure way for investors to invest and trade their digital assets with ease.
Sourcing Capital for Mining & Investment in Precious Metals while providing liquidity to transactable Cryptocurrency Coins using Blockchain Security.