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

Bitfinex and Binance are walking back technical support for Stargate Finance’s plans to reissue its stargate (STG) tokens, according to several announcements that came out this week. They will now promote the use of the protocol’s original STG tokens.

The crypto exchanges’ decision to eliminate support for the new STG tokens follows Stargate decentralized autonomous organization’s (DAO) decision on Tuesday to pump the brakes on its plan to mint new tokens, according to a recent community proposal. At the time of that decision Stargate Finance had already begun disseminating the new STG tokens, according to data from Etherscan – a problem with which exchanges must now contend to eliminate security risks to STG token holders.

StargateDAO initially voted in favor of reissuing all STG tokens by March 15 after it uncovered security risks posed by “illegitimate STG transfers from compromised Alameda wallets,” referring to the failed crypto trading firm where roughly 10% of STG tokens are held. However, the DAO abandoned those plans when liquidators of FTX, Alameda’s sister company, rebuked the plan, arguing it violated an automatic stay issued in the FTX bankruptcy case.

"[The reissuance] was to try to help the safety of the tokens in question. This is now being challenged with the liquidators clearly not wanting them moved," StargateDAO’s latest proposal to unwind the token’s reissuance reads.

As a result, Bitfinex and Binance are now revoking scheduled STG contract swaps on various blockchains. They have also taken steps to ascertain whether their users who have STG holdings are, in fact, holding original STG tokens and not reissued tokens.

Bitfinex provided its users with a contract address on the Ethereum network against which they could check the validity of their STG tokens.

"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," Bitfinex said in its post about the canceled reissuance.

Meanwhile, Binance pledged to "swap [users’] new STG tokens back to old STG tokens" to mitigate security risks associated with the use of the new STG tokens.

Read More: Stargate Finance Token Down 8% on Coinbase Delisting