Recent reports from several prominent sources indicate that what was initially seen as a lucrative $600 million token issuance has unexpectedly become a trap for arbitrage traders.
Exchanges such as BY, BG, and KB—well-known in the secondary and tertiary markets—faced severe technical difficulties during the process. Users attempting to subscribe were hit with a 12-minute delay in the chain confirmation. Meanwhile, the exchanges couldn’t access the API interface in time to claim the full quota, leading to a frustrating outcome: users’ funds were deducted and frozen, but no clear confirmation of success or failure was displayed.
Ultimately, only around $100 million worth of tokens, reserved by the project team, were distributed through centralized exchanges (CEXs). Many users believed their participation had gone through and began hedging aggressively—locking in projected profits of 30–50%. Unfortunately, due to the lack of token allocation, these traders were left holding empty hedged positions and were forced to close their shorts at a loss.
While some funds were returned within a few seconds, the damage had already been done. For instance, KB confirmed that only $16 million worth of subscriptions were successfully processed, suggesting similar shortfalls across other platforms.
The hype, fueled by high market valuations and strong CEX presence, attracted major capital seeking arbitrage via Binance’s pre-market contracts. These contracts offered attractive premiums, drawing even more traders into the fray. However, the absence of tokens to match their hedges resulted in major losses. What began as a strategic arbitrage opportunity turned into unbacked naked short positions, with many still exposed and facing potential liquidation.
Now, the project team has the upper hand. Whether by adjusting funding rates or initiating sharp price surges, they can easily trigger a short squeeze—turning the situation into a calculated trap for arbitrageurs.
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