The Floki protocol and the Bitget cryptocurrency exchange have become embroiled in a dispute, each accusing the other of market manipulation involving the listing and delisting of the protocol's token, TokenFi (TOKEN). The controversy emerged in an October 31 social media post from the Floki team and a blog post from Bitget.
Floki claimed that Bitget listed TOKEN before its official launch, deeming Bitget's listing as a "fake token." In response, Bitget asserted that Floki had "maliciously controlled the initial liquidity to manipulate the market."
Floki's team had submitted a proposal to the Floki Decentralized Autonomous Organization (DAO) on October 18, outlining a staking program with reward tokens designed to target a "trillion-dollar industry with strong potential." This proposal, however, did not reveal the name of the token involved or the purpose of the "reward token." The Floki team claims that this information was leaked to several centralized exchanges.
The Floki team stated that they had communicated with these exchanges, urging them to refrain from listing TOKEN until at least seven days after its launch to comply with DAO governance rules. According to Floki, all exchanges initially agreed to this stipulation, but Bitget purportedly breached this agreement by listing TOKEN before the stipulated timeframe.
TOKEN was scheduled to launch at 3 p.m. UTC on October 27. While Coincodex data indicates it was initially listed on October 28, the time zone differences might account for this discrepancy. The token's price experienced a substantial increase, surging by 11,574% to $0.005850, at the time of the initial listing.
Bitget's listing of TOKEN allegedly didn't involve selling the tokens to customers, which impeded withdrawal processing. This led to a $20 million debt to customers with no TOKEN assets to offset the liability, according to Floki's claims. Reportedly, Bitget attempted to purchase tokens from the TokenFi treasury at a 90% discount, but their request was denied by the team, prompting Bitget to issue a "takedown" statement.
Bitget, in response, argued that TOKEN was listed on October 27, 2023. Following listing, Bitget observed significant price fluctuations in TOKEN and suspected the development team of "maliciously controlling the initial liquidity to manipulate the market." The exchange noted that only $2,000 worth of initial liquidity was added to the token pool. They also cited "opaque token economics and unclear vesting schedules" as reasons for delisting. Bitget offered to repurchase all TOKEN sold to customers at the peak price before delisting, which was around $0.00605002 per token, an approximate 121-fold increase from its initial price.
Floki contested Bitget's claim about the initial liquidity pool, stating that both token pools had nearly $2 million in liquidity each. They provided a screenshot from DEXTswap as evidence, although this screenshot displayed current liquidity rather than initial liquidity. As of publication, the initial liquidity of TOKEN remains undetermined.
The situation involving TOKEN adds to a growing list of token issuance controversies, many of which have resulted in substantial investor losses. These incidents underscore the challenges associated with token launches, liquidity management, and regulatory compliance in the cryptocurrency space.
