The Floki protocol and Bitget crypto exchange have recently found themselves embroiled in a dispute over market manipulation allegations. This controversy arose after Bitget listed and subsequently delisted the token associated with the Floki protocol, known as TokenFi (TOKEN). The accusations were made public through a social media post by the Floki team on October 31, as well as a corresponding blog post by Bitget.
The Floki team accused Bitget of listing the token prematurely, labeling it a “fake token.” On the other hand, Bitget alleged that the Floki team was involved in market manipulation by maliciously controlling the initial liquidity of TOKEN. These conflicting claims have led to a heated exchange between the two parties.
According to the Floki team, they had submitted a proposal to the Floki decentralized autonomous organization (DAO) on October 18. The proposal outlined their intention to launch a staking program with a reward token that aimed to target a trillion-dollar industry with significant growth potential. Simultaneously, they were in talks with centralized exchanges to list TokenFi. Although the specific name of the token was not disclosed in the DAO proposal, various centralized exchanges were allegedly informed about its existence and purpose.
The Floki team insists that they instructed these exchanges not to list the token until at least seven days after its official launch to comply with the governance rules established by the DAO. According to the team, all exchanges agreed to this arrangement, with the exception of Bitget. Instead of waiting for the specified period, Bitget listed TOKEN before it was even launched, which meant that the token was not available for sale at the time of its listing on the exchange.
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Shortly after this incident, on October 26, the Floki team issued a warning to investors, emphasizing that any current TOKEN listings on centralized exchanges were unauthorized. Although they did not explicitly mention Bitget by name, it is evident that the warning was aimed at the exchange’s premature listing of the token.
The scheduled launch of the TokenFi token was announced on October 27, with the team specifying 3 p.m. UTC as the launch time. Coincodex data indicates that the token was listed at an initial price of $0.00005011, and its launch took place on October 28. It quickly surged in value, registering an impressive 11,574% gain, with its price currently standing even higher at $0.006053 per coin.
The Floki team alleges that Bitget listed TOKEN without possessing any of it, causing a significant challenge for the exchange when attempting to process withdrawals. As a result, Bitget accrued approximately $20 million in liabilities to its customers, with no available TOKEN assets to offset this liability. Furthermore, the team claims that Bitget made an attempt to purchase tokens from the TokenFi treasury at a steep discount of 90% from the current market price, which was rejected by the Floki team. Bitget’s subsequent “delisting” statement was allegedly released as a response to this refusal.
Bitget, in its corresponding post, argues that TOKEN was indeed listed on October 27 and experienced substantial price fluctuations following its listing. The exchange suggests that these fluctuations raised suspicions regarding potential market manipulation by the development team, specifically accusing them of maliciously controlling the initial liquidity. According to Bitget, only $2,000 worth of initial liquidity was added to the token’s pool. Additionally, the exchange claims to have discovered an opaque token economy and an unclear vesting schedule associated with TOKEN, rendering its further offering on the platform untenable.
To address the situation, Bitget offered to repurchase all the TOKEN that it had sold to customers. The exchange committed to paying out the peak price of the token before its delisting, amounting to $0.00605002 per token, which represents approximately 121 times its initial price. This offer ensures that any losses incurred by customers prior to the delisting would be covered, but it also means that investors who purchased from Bitget would not benefit from any subsequent token appreciation.
The Floki team refuted Bitget’s claim that they had only provided $2,000 worth of tokens in the initial liquidity pool. They assert that each of the two TOKEN pools had nearly $2 million in liquidity, supported by a provided screenshot from DEXTswap displaying the available amount. However, it should be noted that the screenshot demonstrates the current liquidity and does not confirm the initial liquidity referred to by Bitget. Due to abbreviated contract addresses in the image, it was challenging to verify the pools in a block explorer. Consequently, at the time of publishing, the initial liquidity of TOKEN could not be definitively determined.
Notably, the TOKEN launch incident is not an isolated occurrence, as several other tokens have faced similar challenges resulting in significant financial losses. For instance, BALD token on Base suffered an 85% decline after its developer pulled liquidity from the pool, although they denied responsibility for the subsequent price drop. Additionally, investors incurred losses exceeding $2.2 million during the launch of Pond0X, which reportedly had a faulty transfer function.
The Floki-Bitget dispute serves as a reminder of the potential risks and complexities associated with token launches and trading on centralized exchanges. Traders and investors are advised to exercise caution and conduct thorough due diligence before engaging with new tokens and exchanges, particularly in the emerging field of decentralized finance.
