Arbitrum team is trying to siphon 750 Million tokens from DAO to a slush fund controlled by the team, so that insiders and VCs can cash out while pretending their allocation is “locked”

So Arbitrum distributed tokens last week and as per their tokenomics, it seemed that the team and VC allocation is locked for a year.

Well, they just made a proposal to grant themselves another 750 Million ARB tokens, worth almost $1 Billion from the DAO. They claim its for an “Administrative Budget Wallet”. In reality, it looks like a blatant cash grab. Its the first governance proposal and they aren't even trying to be subtle about siphoning funds out.

Administrative Budget Wallet proposal

Under the disguise of operational and administrative efficiency, they are seeking to transfer 750 million tokens from the DAO to their own pockets, from which they will make “special grants” and what nots.

In crypto, these things almost entirely mean cashing out for real world riches. We have seen thousands of examples of teams cashing out treasury funds. In Arbitrum's case, since the team and VC token allocations are locked, they are creating this new channel of funding which they can splurge on while their actual allocations remain locked.

Some groups have already raised alarm against this blatant cash grab.

Blockworks Research is voting against this.

These 750M tokens were supposed to be part of the treasury but now seemingly lay under the centralized control of 3 individuals.

I hate to say it, but these kind of shady activities actually make people like Gensler right – by using shady structures from Cayman Islands, under the disguise of “DAO”, they are staging a standard insider dumping scam where the team dumps token without any transparency while pretending their original allocations are locked.

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49 thoughts on “Arbitrum team is trying to siphon 750 Million tokens from DAO to a slush fund controlled by the team, so that insiders and VCs can cash out while pretending their allocation is “locked””

  1. I already dumped my Arbitrum tokens but I hope the chain does well for moons’ sake

  2. Oh wow thanks for heads-up OP. I’ll do my own due diligence but it really seems like your perspective is leaning towards that of which is true.

  3. I like second layers on Ethereum, but them issuing their own tokens is already the first sign of a cash grab.

  4. This is why airdrops are usually bad. Always shady people behind the project trying to cash out

  5. Always hard to trust overhyped governance tokens however good the chain might be

  6. $1Bil jesus, wouldn’t they have been happy enough with a couple of Million each?

  7. No, no… I hope it is not true or at least that they will wait with cashing out till peak of bullmarket, so my ARB bags will go up. They were free anyway for me, but I cashed just half and hild rest in hope ARB will pump in bullmarket.

  8. I have a different take on this.

    I am surprised they did not include tokens for this in the original allocation. There should be tokens for grants and to cover the foundations expenses. Most foundations have this.

    At the same time, the retroactive reimbursement portion is a little shady and needs more clarification.

    I don’t take this as straight VCs cashing out.

  9. While Arbitrum is an amazing network the token is absolutely not needed.

    Moreover its tokenomics are awful…

  10. Votes at the moment:

    • 24M ARB (71.89%) for

    • 9.3M ARB (27.53%) against

    Unless some large holders start voting against this thing, it looks like it will pass. ~2 days until the vote closes.

    1inch is now trolling the Arbitrum foundation with their own proposal 🤣

    > This proposal suggests allocating $900,000 worth of $ARB coins from the Arbitrum DAO airdrop to purchase a Lamborghini Revuelto for marketing purposes. This allocation will be used to increase brand awareness for the 1inch DAO, leveraging the car’s visibility in Kyiv and worldwide.

  11. Excuse me ARB to $10


    Right now it’s a governance token that debuted with over a $1 bil marketcap and a massive amount of free $$ to others in the form of an airdrop. I’ve seen this game before and I’m staying far away from this one.

  12. Shady!! So many DAO’s have a predetermined path forward and the bullshit proposals are just for show. RNDR’s RNP process touts community input but one wallet swings every vote in favor every time. Good utility, dishonest governance

  13. Bruh, I better sell. Thanks for the information! It’s valuable info, considering that most other posts are comedy or “what’s your favorite coin today” posts.

  14. We had the drop a week ago, I was surprised that nothing like this had surfaced yet

  15. I think it would be hard to resist if you had so much control over infinite money. Everyone will eventually turn into Gollum,

  16. So does this make it a security now lol, disguised but it’s really just funding the devs

  17. I sold as soon as I could. By that I mean 8 hours after launch because it was an unmitigated disaster.

  18. This is so sad. Maybe the temptation is too great when you are faced with large amounts of money.

  19. Good thing I’ve already converted to ETH.

    I was hesitant but let’s be honest would you rather hold ARB or ETH?

    Easy answer.

  20. I have no idea what’s going on with Arbitrum and their proposed transfer of 750 million tokens to their own pockets, but it crypto is never boring man 🍿

  21. Terrible look on their part, it was really unnecessary too as Arbitrum is gonna keep growing and is a decent project

  22. Everyday I’m happier I sold my bulk moons back when banano exchange had liquidity up to $20K USD without major slippage lol

  23. No shit. The entire point of the coin is to raise capital. There is no need for the coin to even exist.

    Shitcoins and VCs. Fuck them

  24. this is not april fools right? so much for a token that was hyped by many lol and there will still be people who buy this shit.

  25. Surprised really?

    These “governance” tokens are ALWAYS a bullshit legitimization for tokens whose only real purpose if for devs and insiders to cash out one way or another.
    There isn’t a single one that is legitimate.


  26. This is why I sold my ARB tokens I got airdropped immediately. Sure I could miss out on altcoin level gains but I’d rather put the money in safer areas.

  27. This action is really so arrogant and doing unnecessary changes. Totally want to big scam in indirect method.

  28. If you haven’t learned by now that tokens are VC scam coins idk what to tell you. I have been instantly dumping them for pure ETH for years. Especially new ones.

    These technologies are great but they are currently being hounded by VCs to generate liquidity far faster than traditional VCs. Typical VCs are required to wait 5-10 years before an exit, but now we have token liquidity released within a year.

    There are a lot of people that say crypto is a scam, and this is definitely one of the scammiest parts. Many of these technologies just need to charge up front fees and make money, and of course they need investor capital, but releasing that capital to the public within a year, and not vesting for longer than 4 years at least is definitely questionable. I’ll give Arbitrum the benefit of the doubt since the team is strong, but I do not trust their VCs from wanting to exit as quickly as possible and use users as exit liquidity.

  29. Anybody surprised? This is what centralization looks like. Anybody buying tokens like this with trash fundamentals/tokenomics deserves to get rekt. Y’all making us look bad.

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