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FLOKI officials accuse Bitget of manipulating "TOKEN air coins": malicious short selling

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FLOKI officials accuse Bitget of manipulating "TOKEN air coins": malicious short selling

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Table of Contents

Bitget Exchange "TokenFi Controversy" Event

Recently, the TokenFi (TOKEN) token listing event on Bitget Exchange has caused quite a stir. The exchange announced on the afternoon of October 31 that due to "violent price fluctuations and the project party maliciously compressing liquidity to manipulate market prices," it would repurchase TOKEN at the highest closing price on the exchange and delist the trading pair. While this may not be good news for TOKEN holders who were hoping to profit from the price difference, it at least largely ensures that TOKEN holders on Bitget will not end up losing money.

Below is the official announcement from Bitget Exchange:

After the TokenFi TOKEN token started trading, Bitget observed violent price fluctuations. The project party only deposited tokens worth less than $2,000 in the DEX liquidity pool opened that night, suspected of manipulating market prices by maliciously compressing liquidity.

In addition, through further review of the project, Bitget also found issues such as opaque token economics and undisclosed release cycles. In a responsible attitude towards users, after comprehensive evaluation, Bitget decided to delist the TokenFi TOKEN token and introduce a repurchase plan for users holding the token on Bitget, with the following specific arrangements:

  1. Bitget suspended the recharge and trading services of TokenFi (TOKEN) tokens at 16:00 on October 31, 2023 (UTC+8) and canceled all pending orders;
  2. Before 16:00 on November 7, 2023 (UTC+8), Bitget will repurchase at the highest closing price within 5 days of TokenFi (TOKEN) tokens trading on Bitget (from October 27 to October 31), i.e., 1 TOKEN = 0.00605002 USDT;
  3. To simplify user operations, Bitget will convert the TOKEN tokens in users' accounts into USDT at the repurchase price before the agreed time.

Official Announcement Link

FLOKI Official Reveals the Ins and Outs of the Incident

However, FLOKI officials seem to disagree with Bitget Exchange's attempt to shift the blame to the project party. Yesterday, FLOKI officials released a lengthy article on social platforms, countering and revealing the sequence of events in the eyes of FLOKI officials.

Bitget Exchange Forces Listing, Shorting TOKEN

In the article, FLOKI pointed out that the official requirement before the token issuance was that all collaborating exchanges must wait seven days after the token issuance before listing. However, Bitget (FLOKI emphasized that Bitget is the smallest exchange it dealt with) learned of this requirement but secretly listed the token because they saw speculative opportunities in the token.

Furthermore, FLOKI further pointed out that Bitget listed the token 12 minutes earlier than the token's circulation opening. In simple terms, FLOKI accused Bitget's strategy of "prematurely listing the token at what they believed to be a high price and then repurchasing it from the market at a lower price after the token was in circulation," suggesting that the exchange did not actually hold any TOKEN tokens but was merely shorting them.

Market Expectations High, Bitget Caught in a Dilemma

Initially, Bitget Exchange announced that withdrawals would be available 24 hours after trading started, perhaps anticipating a sharp drop in token prices during this time so they could buy back tokens in the market. However, the price of TOKEN tokens exceeded expectations, with market prices skyrocketing. Due to betting in the wrong direction, the exchange suffered losses exceeding $10 million. As a result, Bitget had to refuse to open withdrawals, attempting to buy time.

OTC Negotiations Collapse between Both Parties

Seeing the situation escalating, FLOKI officials "proactively" contacted Bitget Exchange to help them solve the problem. The exchange confessed to FLOKI that they needed up to 1 billion TOKEN tokens to meet withdrawal requests and fill the gap. However, this amount represents nearly 10% of the supply, valued at around $20 million at the time of writing, far exceeding the initial circulation planned.

At the request of the community and Bitget, both parties started OTC negotiations. However, Bitget proposed buying tokens from the TokenFi treasury at a market price of 10% off, which was difficult for FLOKI officials to accept. They wrote in the announcement:

"We find this interesting because the problem is entirely caused by their irresponsibility."

False Accusations and Exchange Concerns

In response to Bitget's premature announcement of delisting TOKEN and accusations against FLOKI officials of "compressing market liquidity, manipulating market prices," FLOKI officials counterclaimed that this statement was inconsistent with the facts. At the time of writing this article, the liquidity in the liquidity pool exceeded $2 million.

Moreover, there are no signs in Uniswap data indicating any large-scale removal of liquidity from the pool by the officials to manipulate market prices.

Finally, FLOKI officials also expressed doubts about Bitget Exchange's solvency and sustainability:

"If a trading platform of this size can collect over $10 million from users who intend to buy its listed tokens but do not purchase enough actual tokens on the blockchain to cover at least the holdings of its users on the exchange, it reflects the platform's unprofessional behavior and overall lack of risk management. Given what we saw with FTX at the end of last year, it is hard to imagine exchanges still exhibiting such behavior."

Both the exchange and the project party have their own perspectives, and the truth is left for users to judge for themselves.

This article is authorized for republication by Zombit