Announcements > C2CX Announcements

C2CX will delist Skycoin

05.06.2019

Update: The Skycoin delisting has been delayed by one day. The remaining two Skycoin trading pairs will be delisted on 7 June 2019 at 7:00 UTC (15:00 China Standard Time). In order to accomodate users with small balances, the minimum trade quantity restriction on the SKY/LONG book has been removed.
 
In order to protect your assets, SKY holders please note the following:
 
(1) Deposits have already been disabled, so please do not send any skycoin deposits. Remaining balances may be withdrawn to either user personal wallets or addresses at other exchanges until 11 June 2019 at 7:00 UTC (15:00 China Standard Time).
 
(2) Automated withdrawals have been disabled. All withdrawals will be processed manually within 48 hours of submission.
 
(3) Since an unknown number of existing Skycoin addresses have been frozen (see below), please be careful where you send the coins. If you plan to withdraw to an existing personal wallet address, please first send a payment to a new address to confirm that the originating address is usable and has not been frozen. Do not assume that your address has not been frozen.
 
(4) Since few other exchanges currently supporting Skycoin have substantial volume, we suggest sending your balance to either Binance or LBank.
 
 
Delisting Catalyst
 
A number of reasons may contribute to a decision to delist a coin or token, for example a failure to maintain sufficient liquidity, or abandonment of the project by the project team. Since C2CX has fairly strict listing conditions, this is not a common occurrence. The Skycoin case is exceptional in this respect, because the cause is literally unheard of in the industry.
 
On Friday May 31, 2019, we determined that the Skycoin development team froze one of our cold wallet addresses (2i5jm1WU3KnnKbsSoHRtUpkATB9mbw9tyGt). While we are aware of previous similar incidents with other addresses and other holders (especially in June 2018), this was the first time that our exchange wallets were affected.

On June 9th, the list of unconfirmed transactions was hidden. The following are screenshots from the Skycoin explorer website on May 31 and June 4 prior to deletion. 

 


Original url link to the unconfirmed transactions list on the Skycoin explorer:

https://explorer.skycoin.net/app/unconfirmedtransactions
 
Freezing addresses is rare in the cryptocurrency space because most cryptocurrencies are based on decentralized blockchains. In the case of most coins it is simply not possible. Even in the few cases where the freezing or blacklisting of addresses is possible, we are unaware of any case where exchange wallets were frozen, since this is basically equivalent to freezing customer funds.
 
This is not the case however for Skycoin, despite many years of talking about a consensus mechanism. This consensus algorithm has a name – Obelisk – but does not exist. Instead, Skycoin uses a single signing server controlled by the development team. This means that they can freeze anyone’s balance at any time. While there is no way to know how many addresses have been frozen, their blockchain explorer used to show 12 unconfirmed transactions, now there are none. Even if one believes in the future of the project, we recommend that all current holders consider this risk when deciding whether to continue holding them.

 
The Skycoin Project
 
Skycoin is an ambitious project, one with the admirable goal of creating a ‘new Internet’ independent of the current one. It is led by a brilliant and idealistic founder, Brandon Smietana. While this goal is certainly sincere, this does not change the fact that much of the rhetoric used to promote it was, and is, misleading if not outright false. For instance, Skycoin marketing materials claim that Skycoin is not subject to a 51% attack or double spending. It also claims ‘global transactions in seconds instead of hours’. That’s all true, but only because it’s essentially a standalone database. Any SQL database can do the same. Moreover, the advertised ‘Coin Join’ functionality does not exist at all. As a result, Skycoin transactions are completely transparent, so addresses are easy for the development team to track and freeze.
 
Skycoin as a project has existed for many years, allegedly since as early as 2013. Over the years, many groups and people have supported it, including not only C2CX, but also John McAfee and the Evolab group, Skycoin’s marketing team in early 2018. In retrospect it is clear that almost all of these partnerships followed the same pattern, ending in a flood of accusations and smears.
 
C2CX began supporting the Skycoin project in 2016, initially by helping to find resources and cover the development costs, then later on as a market maker. In 2017 Skycoin rose in value from under US$1 to over $40 by year end. Despite falling in price along with most other cryptocurrencies in January 2018, Skycoin recovered strongly in the spring, continuing to rise until it was listed on Binance in May 2018. Thereafter the price declined precipitously, falling from US$36 to under $1 by January 2019. In particular during the period between June 25th and July 25th the C2CX market maker spent substantial amounts of funds supporting the Skycoin market price around the US$6 level. C2CX continued to support the project until November 2018. Since then, the Skycoin CEO has alleged that C2CX owes him money, but to date has not provided details (including why we owe him, or even how much).
 
The Skycoin team expressed no interest in resolving the issue.
 
Notably during the same period it was later discovered that the Skycoin CEO had sold large amounts of Skycoin via direct OTC sales. In many cases these sales were made at prices under the market price. This is reflected by a 63% increase in total circulating money supply in 2018, from approximately 6.7 million to over 11 million. From January to June 2019 the total circulating supply expanded an additional 36% to a total of 15 million skycoins. Such continued inflation reduces Skycoin’s attraction as a speculative asset.
 
While we continue to wish the project well, we believe that it will be difficult to succeed in its ambitious goals without real transparency, a stop to inflation, plus a real decentralized approach to managing its blockchain.