TORN down 42% following Binance delisting of ‘problematic’ coin

Happy Monday!

Binance promised the US Department of Justice that it will clean up its act. Now it says it will delist sanctioned crypto mixer Tornado Cash’s token, TORN. The token fell 42% on the news.

Let’s dive into it.

Delisting problematic coins

Binance announced on Monday that it will delist Tornado Cash’s governance token, TORN.

TORN plunged 42% following the news and is currently trading for $2.1.

Analysts linked the delisting to the record $4.3 billion penalty Binance agreed to pay in order to settle criminal charges against the exchange last week.

“Binance is under a lot of pressure following the DOJ settlement to clean up their internal processes, which I imagine also extends to token listings,” Clara Medalie, head of growth at Kaiko Research, told DL News.

“Tornado Cash is a sanctioned entity, thus keeping its token listed was likely to exacerbate the exchange’s already fraught relationship with US regulators,” she said.

Joshua de Vos, research lead at CCData, concurred.

“Following [Binance’s] change in leadership and requirements for reporting compliance to the US, the company is likely focusing on cutting regulatory and legal risks, such as the delisting of problematic coins,” he told DL News.

The US Treasury Department added Tornado Cash to its sanctions list in August 2022, arguing that the protocol was being used by cybercriminals and money-launderers, including North Korean hacking syndicate Lazarus Group.

Binance did not go into detail about why it delisted TORN — as well as the tokens for BitShares, PERL.eco, and Waltonchain — only saying it “periodically review each digital asset we list to ensure that it continues to meet the high level of standard we expect.”

“When a coin or token no longer meets this standard, or the industry changes, we conduct a more in-depth review and potentially delist it. We believe this best protects all our users,” the exchange said.

Among the factors determining the future of a digital asset on the exchange, Binance listed “evidence of unethical/fraudulent conduct or negligence.”

Impact on Tornado Cash

While TORN is not necessary to use Tornado Cash itself, the token is used by the protocol’s governance forum to vote on proposals.

Binance accounted for 66% of TORN’s trading volume in the last 24 hours, according to CoinGecko.

“As Binance accounts for the [majority] of TORN’s trading activity, its actions are likely to affect retail access to the token,” De Vos said.

“However, given that TORN is a governance token and most users of the platform are well-versed in using DeFi protocols, the delisting is unlikely to have a major impact on the underlying protocol in addition to the events in the last couple of years,” he added.

Most delistings tend to target the tokens of dead projects.

However, Tornado Cash still has over $302 million in value locked in the protocol, according to DefiLlama.

“TORN is still available on other centralised exchanges, including Poloniex and MexC, in addition to all major [decentralised exchanges], so it is still possible to acquire the token albeit a bit more complicated,” said Medalie.

Other major centralised exchanges, including OKX and HTX, formerly Huobi, have already delisted the token.

Binance will no longer credit TORN deposits starting December 8, the exchange said.

Withdrawals will no longer be supported after March 7 — by which date the delisted tokens may be converted into stablecoins on behalf of Binance’s customers.

Binance did not respond to a request for comment.

Crypto market movers

• Bitcoin is down 1.6% to $36,795 over the past day.
• Ethereum slumped 2.4% in the same period, trading for $2,020.

What we’re reading

• Ethereum stakers ‘terrified’ of slashing. Company coalition looks to make it nearly impossible — DL News
• New Binance CEO Richard Teng says firm has ‘robust timeline’ for board, financial disclosures — Fortune
• My First Blog as Binance’s CEO — Binance
• Investors Caught In $15 Million Hong Kong Crypto Scam Say Warning Came Too Late — Milk Road
• Effective obfuscation — Citation Needed
• Sam Bankman-Fried Whisperer Tiffany Fong Spills Some Tea — Unchained
• Crypto All-Time High Prices & Market Cap — Milk Road

Tom Carreras is a Markets Correspondent at DL News. Got a tip? Reach out at tcarreras@dlnews.com