The teams behind the Floki protocol and Bitget crypto exchange have accused each other of market manipulation after the protocol’s token, TokenFi (TOKEN), was listed and delisted by Bitget. This is according to an October 31 social media post from the Floki team and a blog post from Bitget.
The Floki team claimed that Bitget listed the token before it was launched, referring to the Bitget listing as a “fake token,” while Bitget claimed that the Floki team was “suspected of market manipulation by maliciously controlling the initial liquidity.”
The Floki team said it submitted a proposal on October 18 to the Floki decentralized autonomous organization (DAO) to launch a staking program with a reward token that would “target a trillion-dollar industry with strong potential.” Meanwhile, the team was talking with centralized exchanges to list TokenFi. The name of the token was not released in the DAO proposal, and the team did not state what the purpose of the “reward token” would be. However, they claim that this information had been revealed to multiple centralized exchanges.
According to the team, they told centralized exchanges not to list the token until at least seven days after it had been launched because doing so would violate governance rules established by the DAO. All exchanges agreed to this stipulation, the Floki team claimed in its post. However, they claimed that Bitget violated this agreement. Instead of waiting seven days to list TOKEN, they listed it before it was launched. This meant that the token was not available for sale at the time it was listed on Bitget, the team stated.
On October 26, Floki sent out a warning to investors that any current TOKEN listings on centralized exchanges were unauthorized, although they did not mention Bitget by name.
The TokenFi token was scheduled to launch at 3 p.m. UTC on October 27, according to a social media post from the team. Coincodex data shows that it was listed at an initial price of $0.00005011 and was launched on October 28, although time zone differences may have caused the discrepancy in date. The price rose almost immediately to $0.005850, a gain of 11,574%. At the time of publication, its price has gone even higher, to $0.006053 per coin.
According to the Floki team, Bitget listed TOKEN without having any of it to sell to its customers. As a result, it was unable to process withdrawals. They claim that Bitget ended up with a $20 million liability to customers and no TOKEN assets to hedge this liability.
Floki claims that Bitget then attempted to buy tokens from the TokenFi treasury at a 90% discount to its current market price, which the team refused. Bitget allegedly released its “delisting” statement in response to this refusal.
According to Bitget’s post, TOKEN was listed on October 27, 2023. After the listing, the Bitget team noticed that TOKEN had “significant price fluctuations.” Because of the large fluctuations, the exchange suspected the development team of “market manipulation by maliciously controlling the initial liquidity.” Bitget claims that only $2,000 worth of initial liquidity was added to the token’s pool. They also claim that they discovered “an opaque token economy and an unclear vesting schedule,” which made continuing to offer TOKEN untenable.
In its statement, Bitget offered to buy back all the TOKEN it has sold to its customers. The token’s peak price before delisting will be paid out to customers, which is $0.00605002 per token or about 121 times its initial price. This implies that any losses that may have occurred before the delisting will be covered by the exchange. However, investors who bought from Bitget will not benefit from any token appreciation after delisting.
The Floki team rejected Bitget’s claim that Floki only provided $2,000 worth of tokens in its initial liquidity pool. They claimed nearly $2 million of liquidity in each of the two TOKEN pools. They posted an alleged screenshot from DEXTswap showing the amount available.
The screenshot shows current liquidity, not the initial liquidity that Bitget referred to. The contract addresses are abbreviated in the image, making it difficult to look up the pools in a block explorer. Cointelegraph could not determine the TOKEN’s initial liquidity by the time of publication.
TOKEN isn’t the only token-launch snafu to result in millions of dollars in losses. BALD token on Base fell 85% after its developer pulled liquidity from the pool, though they claimed they weren’t responsible for the price drop. Investors also lost over $2.2 million in the launch of Pond0X, which allegedly contained a faulty transfer function.