Arbitrum (ARB) Token Dump and Arbitrum Community FUD Explained

Over the weekend, the Arbitrum crypto community experienced panic calls and FUDs regarding the newly launched $ARB token, as holders speculated that Arbitrum Foundation sold a substantial amount of the coins recently.

Cringe.eth, one of the accounts that led the conversation on Twitter, highlighted that Arbitrum Foundation moved out 750 million $ARB worth nearly $1 billion on March 16 — the launch date, and proceeded to send out a part of it to the Binance crypto exchange.

Furthermore, Eden Au, a research director at a Web3 firm, said Arbitrum Foundation made a proposal, AIP-1, to allocate the moved-out tokens for administrative and operational costs. However, approximately 70% of $ARB holders voted against it. The researcher claimed the proposal was merely formality while sharing blockchain data that showed the transfer of 50.5 million $ARB from the foundation.

Notably, these episodes negatively affected the price of $ARB, pushing it from about $1.5 to nearly below a dollar. Additionally, the community accused the foundation of deliberately dumping the tokens on them merely weeks after launch.

However, in a detailed thread on Sunday, Arbitrum said that “the goals of AIP-1 were to engage the community about initial decisions and ultimately have token holders signal their support.” It also clarified that there was no 50 million $ARB sale as indicated on blockchain data.

The foundation said 40 million $ARB tokens were allocated as a loan to a sophisticated actor in the financial markets. At the same time, the remaining 10 million $ARB was converted to fiat to cover operational costs.