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Ethics in Crypto: A case for DeFi: Reef Finance accuses Alameda Research of trying to bully and strong arm new player in crypto space

>For the first $20M tranche, we followed the movement of the sold Reef Tokens and immediately saw that the tokens we had just transferred to Alameda were being offloaded on the Binance exchange.

>We did not move forward with the additional $60M tranche due to doubts around Alameda’s long-term interest in being a strategic investor.

>After seeing that the additional tranche would not go through, Alameda began threatening to delist the Reef token from FTX and said that they would try to get Reef delisted from other top exchanges as an act of retribution if we did not give them the $60M tranche.

>FTX had in fact sold a portion of the first tranche while committing to being a long-term strategic investor.

>The fact that Alameda threatened to delist REEF from centralized exchanges in order to cause damage to the project highlights that CeFi players still have a strong influence on the crypto markets. The possibility of threats around market manipulation by CeFi players was actually the reason why we wanted to launch a DeFi platform in the first place.

https://medium.com/reef-finance/our-official-response-to-recent-events-regarding-alameda-a1978f7fbe57

Despite the obvious market manipulation (the Reef token price went down 30% after the first tweet, that clearly was meant to be interpreted as if there was no affiliation whatsoever between Alameda and Reef, then started to go up again after it was revealed that Alameda had in fact bought $20M in Reef and actually wanted to buy more), I think the most interesting take is on the power held by CeFis.

Regardless of any outcome, even if Reef turns out to be a scam project as some believe it to be, the Medium article is very well written and raises good points about CeFi and DeFi.

A big player can say it will become a long term investor, buy a lot of tokens at a discount and kill a project after a pump. And a CeFi can threat to delist or smear the name of a upcoming project if their demands aren’t met.

Who knows how many small projects were bullied to either conform with their terms or be ostracized? Reef was big enough to stand for itself, as it’s already listed on Binance and has other partnerships, so the threat wasn’t as effective. But maybe others weren’t in the same position.



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4 Comments

  1. FTX, Alameda and Trabucco (trader of Alameda), the clown, should all be investigated for market manipulation. They deliberately made a fool of several thousands retail investors via twitter, and dumping those tokens before the announcements. I lost $1K for these assholes. This is not how you do things correctly, this is taking advantage of you being a VC.

  2. Long term we really should start moving to Decentralised Exchanges, while short term we should start holding those exchanges accountable. Simple vote with your money by boycotting them.

    I always found FTX interesting because of the ability to buy also stocks there, but now I am sure that I will stay away from them.

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