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In March 2022, Alameda Research, a former cryptocurrency trading firm, bought the entire STG auction for $25 million. However, in November of the same year, FTX declared bankruptcy, after which FTX and Alameda’s wallets were hacked for around $500 million. The liquidator finally transfers all the assets to the new wallet.
In light of these events, the Stargate Foundation has proposed re-issuing STG tokens to move funds from potentially compromised wallets to more secure wallets. However, FTX liquidators have rejected this proposal citing concerns that such a move would violate automatic stay and could result in legal consequences.
Stargate DAO contends that liquidators’ concerns are unfounded and that the re-issuance of STG tokens will not violate auto-stay. Despite attempts by exchanges, protocols and external parties to ensure the safety of funds, the foundation stands by its recommendation not to re-issuance STG tokens due to the opinion of FTX liquidators.
The Stargate Foundation is a decentralized autonomous organization (DAO) focused on developing decentralized technologies and solutions. It is built on a blockchain-based platform and is run by a community of individuals holding STG tokens.
The STG token is the native token of Stargate Finance, a decentralized finance (DeFi) platform that enables users to earn interest and other rewards by providing liquidity to various protocols. The token is used to facilitate transactions on the Stargate Finance platform and is also used as a governance token to vote on proposals and decisions regarding the development and operation of the platform.
FTX’s bankruptcy and hacking of his and Alameda’s wallets have raised concerns about the security of STG tokens held by liquidators. In response, the Stargate Foundation proposed token reissuance to move funds to a more secure wallet.
However, FTX liquidators have expressed concern that the move could violate automatic stay and result in legal repercussions. An automatic stay is a legal order that prevents creditors from collecting debts or seizing the assets of a debtor who has filed for bankruptcy.
Stargate DAO argues that the reissuance of tokens will not violate auto-stay as tokens are not considered debtor assets but rather digital assets governed by smart contracts. DAO argues that liquidators’ concerns stem from a lack of understanding of how smart contracts work and how they interact with STG tokens to secure funds.
Despite this disagreement, the Stargate Foundation stands by its recommendation not to reissue STG tokens, citing the opinion of FTX’s liquidators as an important factor in its decision. The Foundation recognizes the importance of maintaining trust and confidence in the Stargate Finance platform and takes all necessary measures to ensure the safety of its users’ funds.
In conclusion, the Stargate Foundation’s recommendation not to reissue STG tokens highlights the importance of transparency and communication in the DeFi space. The incident also underlined the need for clear guidelines and regulations to ensure the security of decentralized financial platforms and protect the interests of investors.
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