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Stargate foundation advises DAO against reissuing STG tokens


Stargate foundation advises DAO against reissuing STG tokens

The Stargate Foundation, in agreement with FTX liquidators, has advised the DAO that issuing the STG token could put its safety at risk and may violate the automatic stay.

Stargate Foundation has advised its decentralized autonomous organization (DAO) against reissuing Stargate’s native Stargate Finance (STG) token due to concerns raised by FTX liquidators. The liquidators have expressed the belief that such a move would violate the automatic stay and could result in legal repercussions.

In March 2022, Alameda Research, the former cryptocurrency trading firm, purchased the entire STG auction for $25 million. However, in November of the same year, FTX declared bankruptcy, following which FTX and Alameda’s wallets were hacked for roughly $500 million. The liquidators eventually transferred all assets to new wallets.

Related: Modular blockchains could be the next hot crypto market trend in 2023

In light of these events, Stargate DAO has proposed reissuing the STG token to move the funds from the potentially compromised wallet to a safer one. However, the FTX liquidators have rejected this proposal.

Stargate DAO maintains that the liquidators’ concerns are unfounded and that reissuing the STG token would not violate the automatic stay. Stargate tweeted that “nothing in any interaction the foundation has had with the liquidators indicates that they have a firm grasp of the reality of the smart contracts, how the contracts work, or how they will interact with the contract to secure the funds.”

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

Despite the efforts of exchanges, protocols and external parties to ensure the security of funds, the foundation is standing by its recommendation against reissuing the STG token due to the opinion of FTX liquidators.

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