Arbitrum Foundation Faces Backlash for Unauthorized ARB Token Movement
The Arbitrum Foundation has stated that it recently sold 10 million ARB tokens to finance pre-existing agreements and cover short-term expenses.
On April 2, the Ethereum (ETH) L2 solution foundation posted a thread on Twitter to clarify that the sale of tokens was necessary to fund its operations.
It also mentioned that the Foundation is a distinct entity from Offchain Labs and was created without any financial resources. Although selling tokens is not the Foundation’s primary goal, there are currently no plans to sell any more tokens in the foreseeable future.
The Arbitrum Foundation has faced criticism due to its AIP-1 proposal. The Arbitrum DAO was supposed to ratify earlier decisions made by the Foundation, including allocating 750 million ARB tokens to itself. According to on-chain data, the Foundation moved 50 million of the assigned tokens without community approval.
However, it stated that 40 million of these tokens were loaned to a professional actor in the financial markets. The Foundation converted the remaining 10 million tokens to fiat and put them towards operating costs. Crypto market maker Wintermute confirmed receiving the 40 million ARB token loan.
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The Foundation plans to split AIP-1 into multiple proposals to address DAO feedback, allowing the community to discuss and vote on each segment. This will also enhance transparency and accountability, particularly regarding the 750 million tokens assigned to the Arbitrum Foundation.
The proposal will include a vesting period and transparency reports. The Foundation intends to rename the Special Grants program the “Ecosystem Development Fund” and clarify its usage. It will propose all new AIPs this week for DAO discussion and voting.
At the time of writing, the ARB token has fallen by 4.97% in the last 24 hours to $1.20, following the Arbitrum Foundation’s controversies. Despite a considerable sell-off after its airdrop, ARB has traded above $1 and is one of the top 40 cryptocurrencies by market cap.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
