Arca fund urges Gnosis developers to buy back tokens from investors

The cryptocurrency hedge fund Arca has judged the performance of the Gnosis project as unsatisfactory and proposed that the team return the investors’ money. According to The Block.

The Gnosis prediction-market platform raised $12.5 million in an ICO in 2017. Later, the developers launched a decentralized exchange intended to improve the efficiency of the core product.

In Arca’s view, which took part in the Gnosis ICO, the project has deviated from the initial goal described in the white paper and is mismanaging the finances.

“The GNO token is not used in any way that would give it value in the Gnosis product line. It is also traded significantly below its book value,” writes Arca.

Given the subdued interest in the Gnosis market, Arca proposes that the company buy back circulating GNO tokens itself. For investors who opt out of the offer, Arca proposes a 10-to-1 token split.

“This would allow Gnosis to rethink the token’s use cases and redistribute the remaining tokens to create a network effect in existing products,” the fund says.

Arca also advises Gnosis to cut costs and “exit dependence on reserve assets provided by GNO token holders”.

Gnosis currently holds about $75 million in reserves in fiat and Ethereum and could fund its operations for another roughly eight years, although the assets of a typical fast-growing startup usually cover only a couple of years.

“Gnosis’s 2019 accounts show that $2 million went to ‘other operating overhead’, including investments in tokens of other projects, including IDEX 2.0 and Zerion. The company has not publicly disclosed these investments or explained their rationale,” writes Arca.

Gnosis co-founder Martin Köppelmann said he was ready to revise the project’s roadmap following a discussion with Arca. However, the company does not intend to abandon the decentralized exchange. He promised to present the community with a detailed plan for developing the GNO token soon.

In April, the Gnosis team announced the launch of a new prediction-market platform focused on COVID-19 pandemic-related events.

Subscribe to ForkLog news on Telegram: ForkLog Feed — the full news feed, ForkLog — the most important news and polls.