Stargate Finance backtracks on STG re-issuance
Days after passing a proposal to reissue its native STG tokens to all holders, StargateDAO has approved another proposal stopping the process. The shift in the DAO’s position trails a Twitter thread detailing the history of the Alameda launch auction token repurchase and current updates on the legal situation.
According to Stargate Finance, Alameda purchased 100% of an STG auction for $25 million on March 17, 2022. Prior to the FTX bankruptcy saga, LayerZero Labs signed an agreement to repurchase the STG tokens from Alameda in October, and a month later (in November), FTX began its bankruptcy proceedings.
Still in November, FTX/Alameda wallets suffered a security breach leading to a loss of approximately $500 million. This fueled the earlier proposal to reissue STG tokens amid fears of a possible compromise from Alameda’s end.
Stargate DAO comes to the conclusion that it is extremely likely that the keys to this wallet are compromised & shared between both the FTX liquidators/Alameda and the hacker and propose a re-issuance of the STG token to move these funds out of this wallet and into a safe wallet
— Stargate (@StargateFinance) March 10, 2023
However, FTX liquidators have stated that if Stargate Finance should follow through with the re-issuance “it will violate the automatic stay and they will aggressively pursue damages.” It appears a lot of drama is brewing between Stargate Finance and the FTX liquidators.
Cliffs: The liquidators prefer to keep the tokens in an unsecure wallet with it’s keys very likely compromised by a hacker and despite not knowing how the contract functions expect to be able to race the hacker to the funds as they vest on a per block basis
— Stargate (@StargateFinance) March 10, 2023
The bottom line is that a proposal to unwind the reissue of STG has been passed and Stargate will continue to use the original STG token within the protocol. Meanwhile, the Alameda-held STG tokens will “remain in the vesting contract where they currently sit at the request of the liquidators.”
“As the legal process plays out, it is hopeful the tokens will be returned to LayerZero Labs and passed onto the Stargate DAO as proposed, but nothing at this time is certain. What Stargate should do is ensure that the protocol is protected,” the proposal said.
Surprisingly, the proposal to unwind the re-issuance saw a whopping 71,506 votes, with more than 98% of the voting power backing it.
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