Solend Founder Calls Out Alameda and ‘Sam Bankman-Fried Ideology’ for IDO Manipulation

The founder of the Solana-based lending and borrowing platform Solend has alleged that Alameda Research manipulated its IDO.

Rooter, the Solend founder, alleged that during its IDO in November 2021, Alameda Research contributed $100 million, inflating its fully diluted market cap to over $2.5 billion.

Rooter then said that $80 million was pulled out at the last minute. One of the accounts he refers to is one linked to Alameda Research. Others have accused Alameda of manipulation as well.

What he implies is that the firm has a vested interest in inflating the value of a Solana-based platform, hence the large contribution. He concludes by saying that “Alameda’s actions reflect SBF’s ideology,” which he describes as being “profit absolves all sins. the ends justify the means.”

In the tweet thread, he compared the incident to the Mango Markets IDO, which experienced manipulation. $500 million was deposited in the first phase of the IDO, and 80% of the funds were withdrawn at the last minute, leading to a lower price for the token.

IDO model a growing trend, but problems exist

IDOs work by asking users to deposit funds into a smart contract. The project’s token then adjusts its price based on the total value of the deposits.

As such, a token’s price can be manipulated to reach a high valuation that might scare off smaller investors. But withdrawing during the second phase can drop the price, and this can result in a large disparity between the IDO price and the listing price. With no limit to the amount that can be bought, whales can have a disproportionate influence on fundraising and token valuation.

Aurory, Mango Markets, and Parrot Protocol are just some of the projects that raised money using the IDO model.

SBF crypto regulations criticized

Meanwhile, Bankman-Fried has been in the news for a variety of reasons, including for his views and efforts relating to regulation. He tweeted on Oct. 20 about his thoughts on crypto regulation, offering a lot of comments.

He believes that regulatory oversight and consumer protection are necessary. One of his suggestions is that there need to be fast and reliable address lists associated with illicit financial activities. This was in relation to sanction lists by the Office of Foreign Assets Control (OFAC). This would most certainly have an impact on the DeFi market.

However, the crypto community criticized some aspects of his regulatory ideas. Many claimed his views would limit economic freedom, one of crypto’s key philosophies. Bankman-Fried then revised his post to account for feedback from the crypto community and said that he welcomed constructive criticism.