Ocean Protocol, Fetch AI caught in a dispute stemming from Ocean’s conversion of 661M OCEAN into 286M FET

The leadership of Fetch AI has accused Ocean Protocol of foul play following the large conversions of OCEAN tokens to FET and the subsequent transfer of those tokens to Binance and other OTC providers, which in turn caused the price of FET to crash significantly. 

In March 2024, Fetch AI, Ocean Protocol and SingularityNET came together to form the Artificial Superintelligence Alliance (ASI), a token merger designed to unify the three projects. It was going to have one ecosystem token, FET, which was projected to later become ASI. The alliance was conceived to pool resources to become leaders in the area of decentralized artificial intelligence. 

Holders of OCEAN and AGIX (SingularityNET’s token) were able to convert their holdings into FET easily as a result.

The tokens at the center of the whole drama originate from the over 56% OCEAN tokens set aside by the Ocean protocol for community incentives.

On-chain activity and the claims

In its thread on X, on-chain analytics platform BubbleMaps pointed out that in July, an Ocean Protocol team wallet (0x4D9B76Df13DF257A674AEc7Ec7232741A6E73883) converted about 661 million OCEAN into roughly 286 million FET and sent 90 million FET to GSR Markets, an over-the-counter (OTC) trading firm. 

On August 31, the remaining 196 million FET was reportedly sent to 30 newly created addresses, and by mid-October, most of those funds had been sent to Binance or OTC providers.

A total of 160 million FET was reportedly sent to Binance and 109 million FET to GSR Markets, bringing the combined amount to an estimated $120 million.

Ocean Protocol and Fetch AI trade public accusations 

In an X post made on October 15, Fetch AI’s CEO, Humayun Sheikh recounted the token movements, including the July conversion and the subsequent transfers to Binance and GSR, and framed them as contradictory to the spirit of the ASI alliance. 

In that post, he said that, were the actions to have been taken by Ocean as a stand-alone project, they “would be classed as a rug pull,” and he urged Binance, GSR, and other entities to investigate and “do the right thing.” 

Sheikh, in a prior post, had hinted that legal steps were being taken and that Fetch AI would pursue remedies to protect its community after he called out Ocean Protocol and OceanDAO for their role in the conversion and transfer of FET tokens.

Ocean Protocol’s CEO, Bruce Pon, responded to Sheikh on X by dismissing the accusations as “unfounded and baseless rumors” and saying the foundation was preparing a formal reply to address the claims. 

However, to date, a formal reply has not been made. Ocean Protocol announced on October 9 that it had withdrawn from the ASI alliance. However, that announcement did not mention the transfers.

Following Bubblemap’s post, Sheikh announced a $250,000 “reward to anyone who can uncover the OceanDAO signatories and their connections to Ocean Foundation.”

Stakes are high for the alliance and community trust

The ASI Alliance was promoted as a blueprint for cross-chain collaboration in artificial intelligence. It reportedly had a combined value of $7.5 billion at the beginning. However, the recent events between Ocean Protocol and Fetch AI have exposed the fragility of such partnerships when governance structures and token ownership are not clearly defined.

The lack of transparent reporting on token conversions on the part of Ocean Protocol raises eyebrows. However, its CEO has called on the parties of the partnership to “waive confidentiality on the adjudicator’s recent findings and let the community inspect and decide.” The recent events have left many token holders uncertain about the fate of their investments.

Fetch AI is likely to go ahead with litigation, as it is planning to do so as a collective with users that suffered losses as a result of the event.

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