Arbitrum (ARB) Token Dump and Arbitrum Community FUD Explained

• Arbitrum Foundation proposed to allocate the 750M ARB for administrative costs.
• While 70% of ARB holders voted against it, Arbitrum moved 50.5 million ARB regardless. 
• The price of ARB fell from about $1.5 to nearly below a dollar.

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.