First Arbitrum DAO vote spirals into disaster: DAO rejects $1 billion spending proposal, but Arbitrum already started spending

After a bumpy start to the airdrop that distributed governance tokens to Arbitrum users, the first use of those governance tokens arguably went even worse. Arbitrum submitted a proposal for DAO members to vote on various governance processes, as well as the distribution of 750 million ARB tokens to an "Administrative Budget Wallet" — tokens that were priced at around $1 billion.

The vote, which still has a day left before completion, is currently standing at 75% against and 25% in support. However, it was discovered that Arbitrum had already begun spending those 750 million tokens, including via the movement of a substantial amount of tokens, and "conversion of some funds into stablecoins for operational purposes".

Another Arbitrum team member subsequently published a post in which they claimed that the proposal was not really a vote but rather a "ratification" of decisions that had already been made by the Arbitrum team, leading many to question what the DAO was even for in the first place. Others questioned the fact that Arbitrum was receiving so much money to use however they liked, not subject to DAO approval.

Things got even messier when the Arbitrum Twitter account "clarified" that "40M $ARB tokens have been allocated as a loan to a sophisticated actor in the financial markets space", and the rest had been sold off for "operational costs". The loan of $52 million worth of ARB to an unnamed actor and the conversion of another $13 million to stablecoins led some to accuse the Arbitrum team of "selling off", cashing in far more than would likely be required for foundation costs in a brief period of time.