Proposals:

1. Exchange tokens should not be used to gain exclusive rewards. (ie. rewards must also be available to purchase with cash or other cryptos). Right now exchanges have total control over the utility of their token.
2. Locking funds in exchange tokens should not be legal.
3. Exchanges should not be able to trade their own token, outside of buying/selling schedules that are reported publicly years in advance (similar to insider trading laws).

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The only true purpose a crypto business serves is to make a profit. Exchanges are not our friends and they do not have morals, they will do whatever it takes to transfer your money to their pockets. Significant regulation is needed to protect users from the various scams that we have seen over the past years.

With exchange tokens, CEX's have exclusive control over an entire market and are actively influencing price to line their pockets. They can give and take away all of the coins utility to steal your funds. Let's look at some of the ways this can be done:

Insider Information

• A majority of exchange tokens are traded on their own platform. This produces valuable data for the exchange that can be sold to trading firms and insiders for huge profits.
• Since they control all utility for the token, they can make announcements and changes to control price.
• We only see the chart price. They see which currencies you are looking up, how long you are on each page, etc. in order to make bets against you.

Leverage Liquidation

• Wait for enough of their own users to take leveraged positions on their own token, and then make a huge announcement to shift prices enough to steal the funds. No trades needed, it's free money at your expense. They know all of the details about your position.

Reward Manipulation

(Looking at you crypto.com)

• CEX's create an exchange token to give users exclusive rewards on their platform. They give themselves and their inside circle tons of the coin to use.
  
• Afterwards, they put out huge rewards for buying and locking their exchange token. This creates a lot of buying pressure, as the rewards can be the best around and appear to be guaranteed profits for those who hold long enough.
• Exchanges/insiders sell on the way up.
• Once they reach their peak for new users and have enough user funds locked, they cut rewards several times so that the token has huge selling pressure and price drops. Without good rewards, the coin no longer has utility.
• They buy back their coin at the bottom that they created, and repeat.

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Thoughts?