A storm of controversy has erupted in the Reddit crypto community after some moderators were accused of insider trading ahead of an announcement that tanked the price of Reddit’s MOON token.
- Reddit unexpectedly shut down its community points program citing scalability issues, leading to a major drop in the price of associated tokens like MOON.
- Shortly before Reddit’s announcement, some subreddit moderators with insider knowledge transferred large amounts of MOON tokens off the platform.
- On-chain analysis by Lookonchain suggests 3 mods sold around 456,353 MOON worth $92,000 just 30 minutes before the announcement.
- Another 363,227 MOON was sold just 2 minutes before the news, likely also by mods with advance information.
- This alleged insider trading by the moderators who had early access to the announcement information has angered many in the crypto community.
- The moderators involved have since been removed from the subreddit team after the backlash.
- The future of the MOON token is now being debated, with proposals like transferring control of the token to the community being considered.
- The incident highlights challenges around transparency and ethical practices in crypto markets that need addressing.
On October 17th, Reddit suddenly announced it would be shutting down its Community Points program that allowed subreddits like r/Cryptocurrency to create tokens like MOON that were awarded to users. The surprise decision cited scalability issues.
This immediately sent the price of MOON crashing over 85% from $0.23 to $0.03. However, eagle-eyed users noticed some suspicious transaction patterns indicating mods may have dumped their tokens right before the announcement.
On-chain analysis shows large MOON transfers from mods like u/Mcgillby occurred just 30 minutes prior. Over 456,000 MOON worth $92,000 was offloaded right before the news went public. Another Reddit mod account that disappeared post-announcement also moved 363,000 MOON to an exchange just 2 minutes before the announcement.
— Lookonchain (@lookonchain) October 19, 2023
These mods were privy to the decision an hour in advance, sparking outrage that they allegedly abused insider knowledge for personal profit at the expense of regular users. The accused mods have since been removed from the subreddit’s team.
The debacle has reinforced the crypto community’s demands for transparency and ethical practices. It also raises concerns over Reddit’s decision to give mods premature access to market-moving information.
While the future of the now near-worthless MOON token is unclear, proposals are being made to transfer control to the broader community. The insider trading allegations have left a black mark on what was meant to be a pioneering social experiment in cryptocurrency rewards.