Sui Coin finds itself under the investigative lens of the Financial Supervisory Service (FSS), with allegations centred on inaccurate reports pertaining to its circulating supply and the purported gains derived from staking activities.
The accountability for overseeing such irregularities falls under the purview of the Joint Council of Digital Asset Exchanges (DAXA), which has faced criticism from Democratic Party lawmaker Min Byung-deok for not taking decisive actions against Sui Coin, despite clear indications of deceptive practices.
During the Government Affairs Committee audit on 17 October, Min Byung-deok raised concerns regarding the substantial depreciation in the value of Sui Coin since its listing in May 2023.
Min Byung-deok underscored that the decline’s primary catalyst lies in the dissemination of false information regarding Sui Coin’s circulating supply, which inevitably exerts influence over its market capitalisation and ranking.
Furthermore, he contended that the Sui Foundation, the entity responsible for issuing Sui Coin, capitalised on locked-up holdings of the token through staking to accrue profits while simultaneously introducing more coins into circulation.
He pointed out:
“It has fallen more than 67% in the five months since listing. The issuer, Sui Foundation, received self-interest by staking (depositing) the locked-up amount and sold it to increase circulation.”
This move has prompted further inquiries into DAXA’s perceived inaction, despite the existence of established guidelines.
In response to Representative Min’s allegations, Director Lee Bok-hyun of the FSS recognised the pertinent issues relating to Sui Coin’s distribution volume and disclosure practices.
He affirmed the FSS’s commitment to collaborating with relevant authorities and taking necessary action should there be substantiated evidence of manipulation or fraudulent activities https://www.coinlive.com/news-detail/181096 by Sui Coin.
“I think there is a problem with the part you pointed out. We are still requesting that Docsa take action to gain consumer trust. If there is manipulation of distribution volume through staking or unfair disclosure, we will consult and take action. I will do it.”
He will be conducting an investigation into SUI’s activities to ascertain whether the team deliberately inflated the token’s supply through practices like staking or non-transparent disclosures.
Sui Coin had previously stated, in June, that it had not engaged in selling staking rewards or any tokens associated with locked and non-circulating staked SUI on Binance or other platforms.
This statement was in response to allegations from DeFi researcher DefiSquared, who contended that SUI had intentionally misrepresented emissions and engaged in the mass dumping of tokens on Binance.
As the investigations unfold, it is essential to note that a significant amount of Sui Coin tokens, approximately $336 million, have been unlocked since the token’s inception.
These allocations include $72 million for stake subsidies, $129 million earmarked for the community reserve, and $139 million distributed to the community access programme.
Furthermore, Series A and Series B investors can anticipate access to their tokens in May 2024, with approximately $290 million worth of tokens scheduled to be unlocked during this time frame.
A spokesperson for the Sui Foundation explained:
“The Sui Foundation wants to address unfounded and materially false statements surrounding the supply of SUI tokens. Contrary to recent conjecture, there has never been any sale of SUI tokens by the Foundation after the initial Community Access Program (CAP) distributions. In addition, Sui Foundation has and remains committed to cooperating with DAXA and its member exchanges in the spirit of full compliance and transparency. The circulating supply schedule displayed in the Sui Foundation public website and available through the public API endpoints is accurate.”