The saga between popular memecoin, Floki, and cryptocurrency exchange, Bitget, began on Halloween 2023, with an accusatory blog post published by the latter on the morning of October 31…

Bitget Accuses Floki of Market Manipulation

Bitget’s post not only announced the delisting of FLOKI’s new sister token, TOKEN (which is connected to Floki’s new TokenFi platform) but also accused the Floki team of potential market manipulation and malicious activity.

The exchange further cited “an opaque token economy” and “an unclear vesting schedule” as driving factors behind its decision to delist TOKEN.

The exchange also announced a buyback initiative, amidst the accusations, that would see Bitget repurchase customer TOKEN assets at a given price:

“Before 16:00 on November 7, 2023 (UTC+8), Bitget will implement the buyback plan on the basis of the highest closing price of TokenFi (TOKEN) within the 5 days when the token is opened for trading on Bitget (from October 27 to October 31), that is, 1 TOKEN = 0.00605002 USDT… In order to simplify the user experience, we will automatically swap TOKEN in user accounts into USDT at the buyback price. If you have any questions, please feel free to contact 7*24 online customer service.”

Floki Responds

In spite of the serious nature of Bitget’s claims, the debacle only exploded in interest when the @RealFlokiInu account issued its comprehensive response to Bitget’s allegations, later the same day.

Betrayed by the “Smallest” Exchange

Floki’s post claims that, having agreed with a roster of tier-one centralized exchanges that they would not list TOKEN until some seven days after the asset’s launch, Bitget (“the smallest of all the exchanges [Floki] had a conversation with”) went ‘behind their backs’ in announcing a listing as soon as TOKEN’s details were announced. This was reportedly done in order to capitalize on the apparent ‘hype’ surrounding TOKEN’s launch. 

Bitget Lists “Fake Version” of TOKEN

What’s more, Floki alleges that Bitget, some 12 minutes prior to TOKEN being made tradable, decided to list a “fake version” of the asset.

@RealFlokiInu also points to three separate posts made within a 24-hour period, warning users against these questionable exchange listings. 

Matters Worsen: Alleged Deceptive Behavior

Floki’s post further alleges that Bitget allowed “tens of millions” of dollars in TOKEN trading to occur, despite there being no evidence of the exchange ever holding even a “single unit of the actual token". If true, this would mean that Bitget allowed users to trade tokens it did not hold.

Withdrawal Issues and Bitget’s 1 Billion TOKEN Hole

According to Floki’s post, Bitget originally claimed that withdrawals would begin some 24 hours after trading commenced. The accusatory post further suggests that this may have been in order to allow the exchange to buy up the token, at a later time, following a descent in the price of TOKEN.

“Instead, the token was up only, and their bet backfired, resulting in a hole of over $10 MILLION for them. So, they refused to open withdrawals and tried to bid for time”, reads the post.

It appears to have been at this point that complaints and reports from Bitget users, unable to withdraw their TOKEN from the platform, began to appear, with Floki citing a handful in the post itself. 

Floki then allegedly reached out to the Bitget team to inquire about the reports, and have since shared a supposed screenshot of part of the conversation:

Shocking Revelations

In what would, if true, likely constitute the most shocking element of the story so far, Floki claims that Bitget eventually admitted to being short of some 1 billion TokenFi (TOKEN) tokens, which it further states constitutes a whopping 10% of the asset’s supply (“about $20 MILLION").

The post further claims that, at one point, TOKEN on Bitget was trading at a whopping 75% discount, seemingly in demonstration of user concerns about the platform’s seeming inability to meet withdrawal requests. 

“Bitget apparently needs up to 10% of the supply to make their users whole”

Alleged Negotiations Between Floki and Bitget

Floki’s post claims that once “connected with the Bitget team, they wanted an OTC deal with the TokenFi treasury to mend this hole”.

Apparently in order to “protect users”, Floki offered an OTC deal for the tokens that was “VERY FAIR”. However, after allegedly refusing the offer, Bitget is said to have offered to buy the tokens but at a 90% market discount.

“We found that quite interesting since the problem was caused by their irresponsibility and their collecting funds from users without buying the TokenFi tokens these users were paying for to cover their users’ position”, reads Floki’s post.

According to the post, Floki alerted Bitget that it would be making an announcement, and that Bitget, in an alleged attempt to “front-run” it, released their article beforehand.

Floki Addresses Bitget’s Accusations

Mentioning frustration at Bitget’s announcement that it was ‘delisting’ a token that it had been requested not to list, the memecoin also addressed the exchange’s accusations that it had manipulated the TOKEN market by adding only $2,000 to the asset’s liquidity pools - a fact that Floki claims is “UNTRUE”.

Questions Regarding Bitget’s Sustainability

Floki’s post ends by bringing into question the wider solvency of the Bitget exchange.

“In addition, we are genuinely curious about the state of Bitget’s overall solvency”

The post claims “strong reasons” to believe that the alleged antics surrounding Bitget and TOKEN are not limited to just that asset, and even compared Bitget to FTX, the now collapsed exchange.

The post further challenged Bitget to publish details of its TOKEN holdings, something that would no doubt reassure its customers.

The final paragraph of Floki’s apparent expose served as a warning to anyone holding or trading TOKEN on Bitget, claiming such actions are an “extreme risk”.

Takeaways

Both Bitget and Floki have fired major accusations at one another, all within the same day, the seriousness of which makes it unlikely the saga will not be followed up, potentially with both sides being urged to provide further evidence to both defend themselves, and implicate the other. Certainly, Floki’s statements to the public appear more comprehensive and supported than those of Bitget, however, it seems likely that the exchange will look to issue follow-up responses in the coming days.

With both sets of accusations yet to be proven outright, the cryptocurrency industry may be in for more drama in the ongoing saga between this popular memecoin, and a heavyweight centralized exchange.