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Mantle User Raises Eyebrows On Proposed Auto Migration Of FTX $43 Million BIT Tokens

David Pokima
Last updated: | 2 min read
Source: FTX

A Mantle community member has proposed the restriction on an automatic migration of FTX BIT tokens to Mantle (MNT) citing disqualifying factors.

A debate sparked by members of the Mantle Decentralized Autonomous Organization (DAO) on the ongoing token migration of certain companies including the FTX exchange has gone mainstream as the platform seeks to unify ecosystems.

Recently, the BitDAO network proposed a merger with Mantle which would see both organizations operate under Mantle. While all the moves to achieve this have gotten positive feedback from the community, the user of the $43 million BIT tokens held by FTX continues to pose a setback.

In November 2021, BitDAO entered into an arrangement with Alameda, a deal that saw BitDAO swap 100 million BIT tokens for about 3.3 million FTT, FTX utility tokens. 

As part of the deal, both companies agreed to hold each other’s assets for three years which was to be due on Nov 2, 2024. The collapse of FTX last year had a ripple effect on BIT’s price as a result of their arrangement following speculations of FTX selling tokens to raise funds.

With the proposal to unify BitDAO and Mantle, all BIT holders will automatically have their tokens converted to MNT. While the proposal received overwhelming support, the matter of FTX’s BIT has faced a backlash as members argue for a suspension of the process. 

At the moment, the on-chain migration contract has been temporarily suspended until the final vote on FTX-held tokens. As a temporary fix, some members propose a new MNT migration contract to restrict assets held by Alameda Research. 

From FTX-linked assets to FTX-linked bank

FTX-linked Farmington State Bank has been sanctioned by the Federal Reserve Bank after it improperly delved into digital assets without prior authorization.

According to the enforcement action, the one-branch lender is supposed to wind down activities after it adopted a pro-crypto business plan in 2022. 

Per the action, the bank is now barred by the Federal Reserve Board and the Washington State Department of Financial Institutions for certain banking activities including “making dividends or capital distributions, dissipating cash assets and engaging in certain activities,” without the consent of its supervisors. 

Allegations leveled against the bank include facilitating the exchange of stablecoins and issuance for 50% of mint fees. 

The collapse of FTX has prompted members of the digital asset community and the wider economic sector to be skeptical of former FTX-linked products as a result of unknown exposure to the exchange. 

This year, prosecutors seized $50 million from the bank claiming it was linked to Sam Bankman-Fried’s plan to defraud investors after Alameda Research acquired an $11.5 million stake in the bank last year.