Stargate foundation advises DAO against reissuing $STG tokens

Stargate Foundation has advised the decentralized autonomous organization (DAO) against re-issuing Stargate’s native token ($STG) as a result of concerns raised by FTX liquidators. The liquidators have expressed their belief that such a move would violate the automatic stay and could result in legal repercussions.

In March 2022, Alameda, 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/Alameda wallets were hacked for roughly $500 million. The liquidators eventually transferred all assets to new wallets.

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In light of these events, Stargate DAO has proposed the re-issuance of 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 the re-issuance of 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 the re-issuance of the STG token due to the current opinion of FTX liquidators.