Popular social networking platform Reddit announced on October 17 that it was terminating its blockchain-based community points program, citing scalability issues. The announcement sparked controversy in the cryptocurrency community, with many calling it a “pull” as the price of the native token plummeted on different Reddit subreddits following the announcement.
Each Reddit subreddit has its own native token. For example, the Moons (MOON) token is the native crypto asset of the r/CryptoCurrency board, while Bricks (BRICK) is the native crypto asset of the r/FortNiteBR subreddit. Users can use these points to purchase badges and exclusive items for their avatar.
When the decision was announced, most moderators of the subreddit participating in the Community Points program claimed to be unaware of the decision. However, this is now being called into question, as new on-chain data suggests that at least a few moderators holding Moon tokens may be linked to three wallets that dumped millions of tokens shortly before the actual announcement currency.
related: Reddit community token surges after Kraken goes public
On-chain analysts such as Pledditor first drew attention to the behavior of a Reddit submoderator who goes by the pseudonym Mcgillby. On-chain data shows that the moderator transferred more than 100,000 Moon through two different transactions on the Arbitrum Nova blockchain, converting it into more than $23,000 in ETH. The user subsequently deleted all previous Reddit posts.
.@Reddit The admin informed /r/CryptoCurrency moderators in advance and sold 3 moderators $moon Insider Information Token$moon Price fell -22% minutes before announcement
Here’s a list of Reddit moderators who took action based on inside information before the announcement: pic.twitter.com/xAh75hOVEa
— Pledditor (@Pledditor) October 18, 2023
In a separate incident, just 17 minutes before Reddit’s public statement, another moderator “rider_of_the_storm” allegedly transferred 345,422 Moons (worth more than $69,000 at the time) to an exchange address. The related Reddit account has been deactivated. Lookonchain said on-chain data showed that at least three administrators responsible for overseeing the cryptocurrency Reddit subreddit liquidated tokens about 20 to 30 minutes before the announcement.
1/three @CCMOD_ moderator abandoned $moon pass early #in Message from @Reddit administrator. pic.twitter.com/ucrPkh6siX
— Lookonchain (@lookonchain) October 19, 2023
accumulated statement Reddit moderators clarified that they were notified of the end of the Community Points program an hour ago, suggesting that at least three moderators may have used the previous information to dump their token holdings.
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