Home Critical engine Why Bittrex Lost Its Lead, Critical Token Sales Mistakes, and How to Get Listed (Interview)

Why Bittrex Lost Its Lead, Critical Token Sales Mistakes, and How to Get Listed (Interview)

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Bittrex Global is the international branch of the American exchange Bittrex based in Seattle, Washington. It is based in Lichtenstein, and it is registered and supervised by the local financial market authority. During the early years of crypto trading and up until the 2017 bull run, Bittrex was considered one of the top exchanges, and the founders were eager to list their tokens on the US-based exchange.

Chris Sinkey is Chief Commercial Officer and Listing Manager for Bittrex Global for non-US users.

During the Paris Blockchain Week conference in April, CryptoPotato sat down with Sinkey for an insightful conversation about the history of Bittrex, the current state of crypto exchanges as it relates to security and regulation, and the future of token sales.

Sinkey told us that “it became clear that because of regulatory clarity, it made a lot of business sense to separate our user base into US and non-US.

Bittrex and Bittrex Global: what is the difference?

Sinkey revealed that he created the new international entity called Bittrex Global in search of regulatory clarity and based it in Lichtenstein, where the company is registered and also supervised.

The two companies (Bittrex and Bittrex Global) continue to have “a relationship to this day from an engineering perspective.” In other words, Bittrex supports Bittrex Global’s engineering backend, trading infrastructure, matching engine, wallet, integrations and new product development.

Additionally, the level of integration between the two companies, along with strict anti-money laundering regulatory compliance, allows for a shared pool of liquidity unlike what other exchanges such as Binance do:

“Other exchanges, like Binance, do the reverse of that. They came to the US using the same infrastructure, but they created a US exchange.

The difference is that our order books are shared with Bittrex US. […] So in a Bitcoin order book, because both markets are available for trading, a US client can be the counterparty to trade with a European client. This is because all clients on our platform are KYC and we follow a very strict and compliant AMPL process.

Chris Sinkey, Bittrex Global CBO. Source: Twitter

Bittrex: from the best exchange in 2017 to the laggard

Bittrex was one of the world’s leading exchanges by trading volume in 2017, but it was also during this year that it started to fall behind.

Sinkey explained this and recalls that the industry back then was very different than it is today. He told us it was “crazy” when he joined Bittrex in 2017, amid that year’s legendary and insatiable bull run.

“Shortly after joining Bittrex, it was the largest exchange in the world in terms of trading volume and number of markets. And there were so many account requests at that time that the price of Bitcoin went from two to three thousand, then up to $17,000, $18,000, and $19,000.

One of our servers that was supporting new account signups was having trouble handling the load. We had to throttle our new users.

This is actually one of the reasons why Binance was able to grow. Because users who couldn’t access Bittrex had to go somewhere. Binance was the new exchange at that time. They had just done their ICO the previous summer and they were really starting to gain popularity.

Sinkey said the reason other exchanges took so much market share in subsequent years was because of the amount of capital they raised and invested in marketing.

He told us that Bittrex made a conscious decision to remain entirely private and self-funded. The crypto exchange has never raised outside capital or launched massive VC-funded marketing campaigns. Instead, he says the company has focused its long-term strategy on strict regulatory compliance and trusted custody practices.

“We are very happy to be in Lichtenstein and Bermuda. So we also have Bittrex Global Bermuda and we have a Digital Assets Business Act license – a Bermuda DBA license. We found it fantastic to work with the regulators. »

When it comes to custody, Bittrex has some of the best security in the crypto exchange industry. The company’s three founders are cybersecurity experts from Microsoft, Amazon and Blackberry.

bittrex-logo
Bittrex Global, logo

Which tokens are listed (and removed)

Coin listing policies are a major sticking point within the cryptocurrency community, and we wanted to learn more about Bittrex’s approach.

Sinkey told us that they took “the approach of backing the long tail of crypto assets rather than trying to be picky and trying to pick which project will win or which won’t. We like to let the market decide.

However, he also clarified that they have a rigorous compliance and due diligence process and a technical review process.

“We break down our registration process into three pillars: legal, compliance and technical. A legitimate project with the desire to come up with new crypto, we will review and run through our process. If they pass these three phases of due diligence, we will list them.

Regarding delisting, the CBO told us that it “is almost always tied to liquidity – it’s almost always tied to a market that doesn’t show demand from our user base over a long period of time. Or there is no liquidity provided by any type of institutional market maker or liquidity support for that market.

The Biggest Token Sales Mistake

During our conversation, Mr. Sinkey offered advice for new crypto startups trying to raise funds by issuing tokens. His MBA from London Business School shines in this part of our interview.

He believes that the number one mistake teams make when raising funds is “they don’t understand the difference between equities and commodities.

“99.9% of the listings we do are utility tokens. They are commodities. When a team goes to market to raise funds, they structure their pre-sale and go to market with a public sale with more intent to raise funds than to distribute its token to token holders, for the purposes of allowing users to use the token in their ecosystem they are building.”

This, in turn, translates into the number one reason most projects fail. He thinks teams should raise the right way and sell shares to accredited investors. Later, they should distribute their token “in a way that enables utility in an ecosystem.”

“That’s probably the biggest mistake that I think a lot of smaller, younger teams don’t really understand the differences there. Or why and when to choose which path for what. They end up overselling the token.

This creates far too much supply and far too many sellers. Because most people bought for investment rather than utility. Then the token price collapses and the project dies.

His advice is to structure the right of presale. For this to happen, the team needs to really understand what they’re trying to accomplish and “get a deal with a pre-sale for your token only if you need it.”

Sinkey argued that teams should only sell what they need and to the right buyers. This brought him to his other point:

“Choose your buyers wisely. If you are pre-selling and you have a token that is B2B in nature, why are you selling it to retailers who can never use it for utility purposes?

If your business is B2B in nature, go out to customers and sell the token to them, or do a proof of concept with them and get it in their hands and see if your platform has any use.

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