Data specialist Pledditor has uncovered that before Reddit’s Community Point program came to a halt, three moderators associated with the platform’s cryptocurrency forum offloaded over 100,000 MOON tokens.
On October 17, Reddit announced its decision to wind down its longstanding blockchain-centric reward system, ‘Community Points’, with the termination set for November 8.
These Community Points are ERC-20 tokens, initially minted on the Ethereum blockchain, but subsequently transitioned to the Arbitrum Nova scaling network. Reddit members had the ability to exchange these tokens for items like badges, GIFs, and additional platform-specific features.
The rationale behind Reddit’s move to shut down the system revolves around regulatory challenges and issues related to scalability.
Although the Community Points system offered expansive potential, Reddit faced challenges in scaling it extensively throughout its platform.
Yet, Pledditor’s data raises concerns about possible insider trading. The findings suggest that three moderators may have acted based on privileged information, disposing of sizable amounts of MOONs, the endemic token of the r/CryptoCurrency subreddit.
Pledditor tracked transactions indicating that Moderator “u/Mcgillby” moved over 100,000 MOONs on the Arbitrum Nova Blockchain, which were subsequently exchanged for ETH valued at more than $23,000.
Reddit Crypto Forum Fumes as MOON Token Dips
Another revelation from the data is that Moderator “u/Rider_of_the_storm” reportedly liquidated a hefty 345,422 MOONs, which had an approximate value of $71,963 at the moment of transfer to an exchange address. This address has not yet been definitively associated with the user.
Moderator “/u/IHaventEvenGotADog” also executed a transfer of MOONs to Arbitrum Nova, though the exact amount remains unspecified.
Prior to these analytical revelations from the blockchain data, the Reddit crypto community had voiced its displeasure at the discontinuation of “Community Points,” with some members branding it as a ‘rug pull’.
In the wake of Reddit’s decision to halt the Community Points system, the MOON token’s value has plummeted, witnessing a sharp 84% drop from $0.25 to its current price of $0.04.
Amid the turmoil sparked by the massive sell-off and suspicions of a rug pull, the moderators of the Cryptocurrency subreddit have addressed the issue, indicating they were given prior notice.
According to their statement, the forum’s administrators were given a heads-up about the impending termination of the Community Points program, albeit only an hour before the public announcement was made.
This explanation, however, did not sit well with numerous members of the subreddit community. A prevalent sentiment among them is that the decision to end the points program was primarily to sidestep potential legal confrontations with the U.S. Securities and Exchange Commission (SEC).