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In About-Face, Crypto Exchanges Abandon Support for STG Token Reissuance

According to various announcements made this week, Bitfinex and Binance are withdrawing their technical support for Stargate Finance’s plans to reissue its stargate (STG) tokens. They will now encourage the use of the original STG tokens for the protocol.

After the Stargate decentralized autonomous organization’s (DAO) decision on Tuesday to put the brakes on its plan to mint new tokens, the cryptocurrency exchanges have decided to stop supporting the new STG tokens, according to a recent community proposal. Data from Etherscan shows that at the time of that decision, Stargate Finance had already started distributing the new STG tokens; this is a challenge that exchanges must now solve to reduce security risks for STG token holders.

After discovering security issues posed by “illegitimate STG transfers from compromised Alameda wallets,” where about 10% of STG tokens are kept, StargateDAO first voted in favor of reissuing all STG coins by March 15. The liquidators of FTX, Alameda’s sibling company, rejected the idea, claiming it violated an automatic stay imposed in the FTX bankruptcy case, and the DAO subsequently abandoned those plans.

“[The reissuance] was done in an effort to increase the security of the concerned tokens. Given that the liquidators obviously do not want them relocated, this is currently being contested “See the most recent proposal from StargateDAO to cancel the token’s reissuance.

As a result, scheduled STG contract swaps on different blockchains are currently being revoked by Bitfinex and Binance. Additionally, they have taken measures to ensure that its users who have STG tokens are actually holding genuine STG tokens and not reissued ones.

In order to verify the legitimacy of their STG tokens, Bitfinex gave its consumers a contract address on the Ethereum network. In its post about the canceled reissuance, Bitfinex stated, “We would like to remind our customers that there are STG tokens with different contract addresses in circulation. Therefore, please don’t send any STG tokens to our platform other than the one with the above contract address to avoid losing funds.

For its part, Binance promised to “change [users’] new STG tokens back to old STG tokens” in order to reduce the security concerns related to using the new STG tokens.

 

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