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Binance Holdings Ltd. is updating its token listing procedures to enhance investor protection by screening listed tokens more rigorously. This move comes in response to previous incidents of investors falling victim to fraudulent schemes like rug pulls, resulting in significant financial losses. Binance aims to prevent the listing of questionable crypto projects by refining its listing criteria, as reported by Bloomberg.
The exchange is modifying the conditions for crypto projects looking to list their tokens, particularly focusing on the “cliff period.” This period denotes a timeframe during which a portion of the total coin supply is locked within a smart contract. Tokens gradually become available according to a preset schedule only after this period expires. Market makers, crucial for providing liquidity, are allocated these tokens but face restrictions on their withdrawal capabilities.
Binance has now increased the required cliff period to a minimum of one year, up from the previous maximum of six months. Additionally, the platform aims to reserve a larger fraction of tradable tokens for market makers to ensure ample liquidity.
According to a Binance spokesperson, the exchange does not impose lock-in periods for listed projects. Each project can independently decide its token vesting schedule. The spokesperson emphasized that the primary goal is to protect investors, with longer vesting schedules encouraging greater commitment from projects, ultimately benefiting users and the ecosystem.
These policy adjustments are part of a broader initiative by Binance to enhance regulatory compliance and investor safety following a challenging year. In 2023, Binance faced legal challenges, including a lawsuit from the U.S. Securities and Exchange Commission (SEC) for alleged violations of federal securities law and a significant settlement with the Department of Justice (DoJ), amounting to a $4.3 billion settlement and the resignation of co-founder and former CEO Changpeng Zhao.
