April 19, 2024
Insider Trading Allegations Shake Reddit's Moon Token Ecosystem
Latest Cryptocurrency News

Insider Trading Allegations Shake Reddit’s Moon Token Ecosystem

Before Reddit officially revealed plans to end its Community Points program, on-chain researchers observed that it appears that insiders connected to the Cryptocurrency section of the site sold off substantial amounts of Moons, the forum’s cryptocurrency.

The value of the Moon token fell by 85% as a result of this revelation.

The value of the Moon token fell from $0.25 to less than $0.04 in a matter of hours after Reddit, a popular social media network, informed users that it intended to abandon its blockchain-based Community Points system.

Reddit subreddit moderators have said that they were not informed of Reddit’s planned move, but blockchain data tells a different story. Minutes before Reddit’s statement on October 17 at 1:02 p.m. ET, wallets that seemed to belong to these moderators loaded significant quantities of Moon tokens.

Several of the transactions that were examined are noteworthy. On-chain analysts Pledditor and Lookonchain were the first to draw attention to one such occurrence involving a subreddit moderator with the pseudonym Mcgillby. On-chain data reveals that this moderator moved more than 100,000 Moons over two different transactions on the Arbitrum Nova blockchain, turning them into more than $23,000 in ETH. All earlier Reddit postings were subsequently removed by the user.

Mcgillby has previously been listed as one of the top 20 Moon holders as well as a moderator. Moons, which are ERC-20 tokens, may be kept in Reddit Vault, a dedicated cryptocurrency wallet that keeps track of all transactions involving moderators on the blockchain and links them to their wallet addresses.

About 17 minutes before Reddit’s open statement, “rider_of_the_storm,” a different moderator, reportedly shifted 345,422 Moons, worth over $69,000 at the time, to an exchange address. The Reddit account in question has now been deactivated.

Over $92,000 worth of tokens were sold by McGillby and rider_of_the_storm together. It appears that the two individuals have been demoted from their moderator positions on the subreddit. Ten additional moderators are currently in charge of overseeing the subreddit.

According to Lookonchain, on-chain data showed that at least three of the administrators overseeing the cryptocurrency subreddit liquidated tokens with possible insider knowledge 20 to 30 minutes before the announcement went public.

Five minutes after Reddit’s public announcement, at 1:07 p.m. ET, the subreddit moderators released a message from their joint account claiming they had been told of the cancellation of the Community Points program just one hour before.

However, it appears that some moderators may have hurried to sell their Moon token holdings before the information was made public based on the quick sequence of on-chain transactions that followed this internal announcement.

“Points were never intended to have any monetary value, and buying, selling, and trading Points has always been a violation of our terms for the product,” a spokesperson for Reddit stated. “Outside of that, we regularly preview updates to the platform to moderators before we roll them out for their feedback, which is what we did here. But that is irrelevant as the actions taken were against the terms the participants agreed to,” the spokesperson concluded.

Image: Wallpapers.com

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