Free TON partner suspected of exit scam

Members of the Free TON community drew attention to the behaviour of one of the project’s partners—the MerkleTree.capital fund.

In early November 2020, a user with the handle DavidPark11 posted on the Free TON forum предложение о сотрудничестве с MerkleTree.capital, describing it as ‘a cryptocurrency hedge fund that specialises in cross-border payment services across the African continent’. The fund’s website is hosted on the domain of the same name and is still accessible.

The authors claimed to own four platforms for trading digital assets, with a combined user base of about 600,000 and annual revenue of $21 million. The potential partner proposed integrating TON Crystal into their services and listing several trading pairs with the ‘Crystal’.

Although some users pointed to flaws in the site (a non-working message form, no followers on the fund’s social media pages, lack of evidence of ownership of the trading platforms), members of Governance—a council of more than 20 founding companies—approved the MerkleTree.capital proposal.

The agreement envisaged an upfront payment of more than 128 000 TON Crystal. The coins were sent to the MerkleTree.capital address on December 24. Over the next three days the address owner sold 112 000 coins at prices of $0.27-$0.37, and the remainder was sold in March and April. The last 100 ‘Crystals’ were withdrawn from the wallet on July 4, and the balance is now 0.7 TON Crystal.

The proposer, DavidPark11, stopped replying to Free TON users after receiving the advance, showing no activity himself or from the ‘fund’.

As Alexander Filatov, chief executive of TON Labs, explained, Free TON has no full-time staff to assess the viability of potential partners; there are only ‘volunteers’ from among the community who analyse proposals. According to Filatov, before the vote on the MerkleTree.capital proposal they issued a ‘neutral’ assessment.

After this episode the community will scrutinise partners more carefully and pay closer attention to ‘red flags’. I believe this is a normal milestone on the ‘learning curve’ in building a partnerships framework for a decentralised community,” said the head of TON Labs.

Free TON operates a meritocratic issuance model, with new coins entering circulation through community-run contests and through payments to corporate partners that integrate the Free TON blockchain or its native token TON Crystal into their services. For more on how Free TON works, read ForkLog’s special project.

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