Charlie Lee, the creator of Litecoin (LTC), and Whale Panda, a recognized crypto-related figure, have criticized the Stellar Development Foundation’s decision to burn 50% of XLM’s supply.
Mr. Lee said that the XLM in the market are now more concentrated on the SDF while Whale Panda explained this decision makes XLM more prone to be considered a security.
Stellar Development Foundation Criticized For Its Decision
It was clear that the decision to burn 50% of the XLM supply was going to be controversial. Although it helped XLM to surge by 20% in just a few hours, its reputation may now be affected.
The Stellar Development Foundation (SDF) decided to burn 55 billion XLM tokens. The main goal was to restructure its development strategy and reduce the giveaways and airdrops, which they consider had diminishing effects.
Charlie Lee wrote on Twitter that 50 billion XLMs burned were going to be distributed to the community. However, the SDF only burned 5 billion of their 17 billion XLMs in existence.
This allowed the SDF to increase their percentage of total coins owned from 16% of the total XLM supply before the burning to 24% after it.
At the same time, Charlie Lee got surprised by the fact that they did this without any community discussions on the matter.
Meanwhile, Whale Panda explained that burning 50% of the XLM supply makes this cryptocurrency more prone to be considered a security by the U.S. Securities and Exchange Commission (SEC) and other regulatory agencies in the world.
In addition to it, he stated that the chances of getting delisted on exchanges increase exponentially after this issue.
About it, he said:
“I wonder how long it will take for them to realize that burning 50% of the supply actually makes you even more a security and increases the chances of getting delisted on exchanges.”
Moreover, a crypto user said on Twitter that the SDF announced the coin burn to a room of 200 Stellar fans that were ready to front-run the rest of the market.
After the official announcement of the coin burn, XLM moved from under $0.07 to over $0.0835 in around three hours of trading, an increase of 20%. Since that moment, XLM fell by 5.5%. At the time of writing this article, XLM price is currently $0.079126 and a market capitalization of $1.58 billion.