Bitget is tightening its listing conditions in response to the recent turmoil involving its native token, BGB, amid accusations of market manipulation.
The cryptocurrency exchange will enforce stricter token listing requirements and implement comprehensive legal reviews that assess code quality, security, and compliance with its strategic objectives.
Enhanced evaluation process for new tokens
As part of its updated listing protocol, Bitget will closely evaluate the tokenomics of projects seeking to be listed on the platform. This process will require thoroughly examining token supply, distribution, and utility to ensure transparency and stability. The exchange emphasizes that the qualifications and experience of the development teams behind these projects will be scrutinized more rigorously than before.
Bitget has introduced a significant metric known as the fully diluted valuation (FDV), which calculates the potential total value of a project’s token supply. The exchange mandates that the FDV must not exceed 20 times the funds raised. For example, if a project secures $5 million, its FDV should remain below $100 million. This rule aims to mitigate the risk of overvaluation and ensure sustainable growth for newly listed tokens.
Additionally, the management of funds within projects will be examined closely. Projects backed by well-known institutions will likely face a smoother approval process, while lesser-known supporters will necessitate more extensive due diligence. This shift aims to foster a safer trading environment and instill confidence in investors.
Scrutiny of token unlock schedules
Another crucial element of Bitget’s enhanced evaluation involves the unlock schedules for tokens. The exchange has identified projects with short unlock periods, particularly under two years, as potential red flags. Short unlock times may indicate a lack of long-term commitment from development teams, leading to early sell pressure and destabilizing the token’s market performance. By implementing this criterion, Bitget ensures that projects commit to their long-term success.
Response to the recent BGB price crash
The exchange’s decision to impose stricter listing conditions comes in the wake of a dramatic decline in the value of BGB. On October 7, the token’s price dropped over 56%, plummeting from $1.14 to as low as $0.53 within hours. In a statement issued on October 8, Bitget attributed the price drop to large leveraged transactions that triggered a series of forced closures in pledge lending, leveraged trading, and contract trading products.
These events culminated in significant price fluctuations that affected many users. Bitget has promised to compensate users impacted by the price decline. Users holding BGB-backed leveraged positions or using BGB as collateral will receive compensation by October 10, though details remain sparse.
The compensation will be provided in USDT or through short positions on BGB. Analysts speculate that high-frequency trading or internal market pressures may have contributed to the surge in leveraged trades that led to the price drop. As Bitget implements these new measures, the exchange aims to create a more secure environment for crypto investors while promoting responsible practices among new projects.