Crypto tokens are the cornerstone of any blockchain economy, playing a vital role in ensuring network security, operations, and overall growth. Among these tokens, SUI tokens hold significant importance within the Sui network, serving four key purposes that drive its functionality and governance. However, recent events have sparked concerns over the token emission schedule and unauthorized transactions, leading to the Sui Foundation accusing its partner, MovEx, of being a “sneak seller” of SUI tokens.
The Crucial Role of SUI Tokens in the Sui Network
SUI tokens form the backbone of the Sui blockchain, serving essential functions such as staking for network security and earning rewards, paying gas fees for transactions, acting as a native asset for on-chain activities, and granting holders the right to participate in future governance decisions. Their importance in driving the network’s operations cannot be overstated.
Token Supply and Circulation Strategy
Unlike fiat currency, the token supply of SUI is predetermined and inflexible, with a cap of 10 billion tokens. Decisions on fixed or unlimited supply are made before the network’s launch, ensuring stability. Native tokens are not all released at the genesis of the chain; instead, they are gradually introduced into circulation. By the end of May, 5.15% of SUI tokens were in circulation, with the remaining tokens scheduled for release to maintain network stability and support early contributors.
Unraveling the Alleged Violation by MovEx with Sui Foundation
On June 27, 2023, a series of tweets raised suspicions about the Sui Foundation’s token emission schedule and the dissemination of rewards from locked and non-circulating SUI tokens onto Binance. A thorough investigation by the Sui Foundation revealed that MovEx, a partner, had violated the contractual lockup by conducting unauthorized transactions of 625K SUI tokens to three unique wallets.
After the announcement from Sui, MovEx has issued an official response to the allegations, asserting that they have no objections to the project’s continuation and will proceed with further development despite the recent event.
The Story Behind
One month ago, some members of the community raised concerns that the project secretly sold a significant amount of staking rewards on the Binance exchange. Through on-chain monitoring, the Twitter account @defisquared discovered that the Sui Foundation’s staking address transferred 2.5 million SUI tokens to Binance on May 31.
Specifically, this account conducted further investigations into the pressure to sell SUI starting in early June. The project only disclosed the monthly unlocking for market makers and community reward programs in its tokenomics without any mention of the 2.5 million SUI transfer to Binance.
Upon becoming suspicious, @DefiSquared accessed Sui’s Discord channel and requested the daily token unlocking schedule, but the project team did not provide a response.
@DefiSquared estimated that the actual monthly increase in SUI supply could be over 33 million SUI higher than what the project had disclosed, resulting in an alarming 20% monthly inflation rate for SUI holders.
The account also claimed that the SUI tokens sold in the market originated from Sui Foundation’s staking rewards, even though these tokens were supposed to be locked and not allowed to circulate. The parties involved deliberately split and transferred the SUI tokens to multiple wallets before sending them to Binance.
Despite both SUI and tokens distributed to the investment fund during the TGE being locked, they can only be used for staking on the network to verify transactions and receive rewards, and the received token amounts are also locked.
In response, Sui Foundation, the organization behind the Sui blockchain (SUI), refuted these allegations and pledged not to sell any staking rewards or “internal” tokens. They affirmed their commitment to following the lockup schedule and prohibiting transfers. Transactions related to the suspected token dumping address are said to still adhere to this procedure.
On June 27, Sui Foundation made a tweet stating:
“Sui Foundation has never sold any staking rewards or locked tokens on Binance or any other exchange. All tokens allocated to investors and the project team remain locked and non-transferable.”
In response to the alleged “sneak selling” of SUI tokens by MovEx, the Sui Foundation took swift action to safeguard the network’s integrity and transparency. By terminating their partnership and ensuring the tokens are held in qualified custodian accounts, the foundation upholds its commitment to maintaining a vibrant, active community and supporting the network’s continuous growth. As Sui progresses, the Sui Foundation remains dedicated to fostering a robust ecosystem and empowering builders, developers, and end-users in the next generation of connected experiences.