Stargate, a cross-chain liquidity protocol based on LayerZero, has been at the center of a debate regarding the reissuing of its STG token. The Stargate Foundation has suggested that DAOs should not reissue the token, but the FTX Liquidators may seek compensation if they do.
The debate started after FTX, a crypto exchange, suffered a hack last year. FTX/Alameda’s wallet was compromised, and hackers made away with approximately $500 million. The FTX Liquidators eventually transferred all assets to a new wallet, ensuring that the keys were not leaked to the hackers. However, Stargate DAO believes that the keys to the wallet were likely leaked and shared between the FTX Liquidators/Alameda and the hackers.
As a result, the Stargate Foundation has suggested that the STG tokens be reissued to transfer the funds out of the compromised wallet. However, the FTX Liquidators have stated that this would violate their automatic cessation clause, and they would seek compensation if the tokens were reissued.
After consulting with their lawyers, the FTX Liquidators have determined that the tokens are already in their wallet, and there is no need to take any action. They will be removed on March 17th. However, the Stargate Foundation believes that this is a mistake and that there is no evidence that the FTX Liquidators have a deep understanding of the smart contract’s actual situation, operation, and interaction with the contract to ensure the safety of the funds. The Foundation believes that the FTX Liquidators are more willing to keep the tokens in an unsafe wallet.
LayerZero Labs, which owns the STG tokens, has stated that it reserves the right to take legal action and exercise any remedial measures at any time concerning the issue of ownership of the STG tokens and any losses resulting from the Liquidators’ irresponsible behavior in ensuring the safety of these funds. Assuming they are successful and win in court, the tokens will be transferred to the Stargate DAO at cost.
Previously, on February 6th, the Stargate DAO proposal to reissue the STG token was passed with a 90% approval rate. The proposal will be executed on March 15th as per the proposal’s content.
While the situation remains uncertain, the debate surrounding the reissuing of the STG token continues. It remains to be seen what action, if any, will be taken by the FTX Liquidators and whether the Stargate Foundation’s concerns about the safety of the funds will be addressed.