Popular social network platform Reddit announced the winddown of its blockchain-based community points program on Oct. 17, citing scalability issues. The announcement created controversy in the crypto community, with many calling it a rug-pull, as the price of the native token on different subreddits tanked after the news was revealed.
Each subreddit had its own native token. For example, the Moons (MOON) token was the native crypto asset of r/CryptoCurrency, while Bricks (BRICK) was for r/FortNiteBR. Users could spend these points on badges and exclusive items for their avatars.
At the time of the announcement, the moderators of most of the subreddits involved with 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 couple of moderators holding Moons may have been linked to three wallets that dumped millions of the tokens shortly before the announcement.
On-chain analysts such as Pledditor were the first to draw attention to the actions of subreddit moderator u/Mcgillby. On-chain data reveals that this moderator transferred more than 100,000 MOON over two different transactions on the Arbitrum Nova blockchain, turning it into more than $23,000 in Ether (ETH). The user subsequently deleted all earlier Reddit posts.
Here is a list of Reddit moderators acting on inside information BEFORE the announcement: pic.twitter.com/xAh75hOVEa
— Pledditor (@Pledditor) October 18, 2023
In another incident, just 17 minutes before Reddit’s statement, moderator u/Rider_of_the_storm allegedly shifted 345,422 MOON, worth over $69,000 at the time, to an exchange address. The Reddit account in question has since been deactivated. According to Lookonchain, on-chain data showed that at least three of the administrators overseeing the cryptocurrency subreddit liquidated tokens some 20 to 30 minutes before the announcement went public.
— Lookonchain (@lookonchain) October 19, 2023
A statement from the Reddit moderators clarified that they received the notice about the termination of the community points program an hour prior, suggesting that the three moderators could have used the information to dump their token holdings.