Reddit Blockchain Program Closure Sparks Insider Trading Allegations
Summary:
Reddit is closing its blockchain-based community points program due to scalability issues. The unexpected announcement led to a decrease in the value of subreddit-based tokens, raising suspicion amongst the crypto community. New on-chain data suggests that certain Reddit moderators, previously claiming to be uninformed about the termination, may have dumped millions of tokens just prior to the announcement. At least two moderators, believed to have traded a significant number of tokens for Ethereum, deleted previous posts and deactivated accounts following the transactions. A joint statement from the moderators admitted they had been informed about the program's end an hour beforehand.
On October 17, the well-known social media platform, Reddit, declared the termination of its blockchain-based community points scheme citing scalability challenges. This declaration stirred up a storm in the crypto sphere with various critics labeling it a rug-pull, as the proprietary token value across several subreddits plummeted following the announcement. Each subreddit boasted a distinctive native token. For instance, Moons (MOON) was the native cryptocurrency of the r/CryptoCurrency board, and Bricks (BRICK) belonged to the r/FortNiteBR subreddit. Users could exchange these points for exclusive avatar items and badges. When the announcement was made, the majority of subreddit moderators stated they were blindsided by the decision involved with the program. However, this claim is now under scrutiny as emerging on-chain data indicate that at least two moderators who held Moon tokens could be linked to three wallets that dumped millions of the tokens just before the announcement. Notable analysts like Pledditor were the first to spotlight the questionable actions of a subreddit moderator operating under the alias Mcgillby. On-chain data reveals that this moderator moved upwards of 100,000 Moons in two separate transactions on the Arbitrum Nova blockchain, transforming them into over $23,000 in Ethereum (ETH). The user then erased all their prior posts on Reddit.
Less than 30 minutes prior to Reddit's public disclosure, "rider_of_the_storm", another moderator reportedly transferred 345,422 Moons valued over $69,000 then, to a trading platform address. The implicated Reddit account has since been deactivated. As per Lookonchain, on-chain data demonstrates that at least three administrators in charge of the cryptocurrency subreddit unloaded tokens roughly 20 to 30 minutes before the announcement was made public.
A consolidated statement from the Reddit moderators clarified that they were informed about the discontinuation of the community points scheme just an hour prior to the announcement. This implies that at least three moderators might have used this preliminary information as a basis to offload their token holdings.
Published At
10/20/2023 1:15:44 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.