Helium, The A16Z-Backed Crypto Unicorn, Spars With Binance Over Delisting

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

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

In a blog post Thursday, Binance said that it would cease 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 advised” people to close out their positions, or else it would “conduct an automatic settlement and cancel all pending orders” relating to HNT and its trading pairs on October 12.

Users may continue to spot trade with the HNT/Binance USD (Binance’s stablecoin, BUSD) pair.

In a statement to Forbes, Binance spokesperson Jessica Jung said the exchange periodically reviews “each digital asset we list to ensure that 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, we conduct a more in-depth review and potentially delist it in order to protect our users.”

In response, Maggie Philbin, a spokesperson for the Helium Foundation, which manages the community, said in a statement to Forbes that “there is no basis for Binance to delist several HNT pairs. There has been no change to the integrity of HNT and it continues to meet all of the standards the exchange sets.”

Philbin 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.”

Helium’s parent company Nova Labs, 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?” one user wrote Thursday. No Helium employees responded. Community members received only a terse reply from a moderation bot: “No discussion on exchanges here, please see #rules.”

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

Traders also wondered if the move stemmed from a September scandal wherein Binance mistakenly classified another one of Helium’s less valuable tokens as HNT, causing the exchange to transfer 4.8 million HNT to users at a loss of approximately $19 million. Community sleuths have theorized that Binance partially delisted Helium as a result of its threatened HNT liquidity, though it remains unclear how Binance would recover its losses by penalizing HNT trading.

Exchanges like Binance delist tokens for multiple reasons, sometimes after being informed of an investigation or enforcement from an agency like the Securities and Exchange Commission, said Carol Van Cleef, chair of the Blockchain and Digital Assets practice at the law firm Bradley. Helium’s delisting is “going to attract attention and cause people to ask questions as to why,” she told Forbes. The SEC did not respond to a request for comment.

In the past year, major exchanges have curtailed tokens in light of controversy and government regulation. Binance suspended spot trading for LUNA this May, after the Terra Luna crash cost countless investors their savings. And while the exchange once schemed to evade U.S. regulators, according to a 2020 Forbes report, Binance has since opted to delist some currencies that were deemed securities by the SEC.

Binance also limited trading pairs for Ooki Protocol on Thursday. Last month, the Commodity Futures Trading Commission (CFTC) charged Ooki’s founders and governance DAO (decentralized autonomous agency) with numerous violations, including illegal digital asset margin trading and a lack of compliance with the Bank Secrecy Act. The regulator’s complaint notably extended to DAO members, who were unprecedentedly served a summons via the website’s chatbot. It’s unclear why Ooki was similarly affected by the exchange.

Binance’s move follows an investigation published by Forbes last month exposing previously undisclosed windfalls earned by Helium executives and insiders shortly after the network’s launch in 2019. The value of these earnings peaked at 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 used my money elsewhere and actually gained some income, not lose it after I pay my electricity bill.”

Founded in 2013, Helium initially aimed to capitalize on the Internet of Things sector before pivoting to crypto in 2019. Its plan was to incentivize people to buy hotspots, which could transmit data for devices such as tracking stickers or smart mouse traps. By purchasing the company’s $500 hardware, 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 like 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 revenue has instead come from new user registrations.

Prior to that, Helium also drew scrutiny for misrepresenting its customers, claiming that Salesforce and e-scooter company Lime were clients. Both companies denied any relationship.

Currently, Helium is promoting an entirely new venture to its community. Known as Helium 5G, it aims to provide connection to 5G devices, and has launched an associated crypto token, MOBILE, to underpin it.

Like other crypto projects, Helium could be facing impending regulatory headwinds, and over the past year, federal agencies have targeted the crypto industry from many sides. Last October, the Department of Justice established a specialized National Cryptocurrency Enforcement Team. The SEC and CFTC have respectively tackled financial and community crypto investigations. And in September, even the White House released its own framework for examining and regulating the industry.

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