Reddit, the popular social networking platform, recently announced the termination of its blockchain-based community points program on October 17, citing scalability challenges. The decision triggered uproar within the cryptocurrency community, as the native tokens of various subreddits plummeted in value following the announcement.
Suspicious Token Movements
Analysis of blockchain transactions from the wallets of Reddit moderators has raised suspicions that at least three moderators liquidated significant amounts of Moon tokens just moments before the official announcement. Each subreddit within the community points program had its unique native token, like Moons (MOON) for r/CryptoCurrency and Bricks (BRICK) for r/FortNiteBR. These tokens allowed users to purchase badges and exclusive items for their avatars.
Moderators’ Pre-Announcement Actions
Initially, moderators of these subreddits claimed to be blindsided by the decision to end the program. However, on-chain data now suggests that some moderators holding Moon tokens may have been involved in suspicious transactions. An on-chain analyst named Pledditor highlighted a moderator with the username “Mcgillby,” who moved over 100,000 Moons, converting them into more than $23,000 worth of ETH on the Arbitrum Nova blockchain. Notably, this user deleted all their previous 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 instance, just 17 minutes before Reddit’s official announcement, a different moderator, “rider_of_the_storm,” allegedly transferred 345,422 Moons, valued at over $69,000 at the time, to an exchange address. Subsequently, this Reddit account was deactivated. According to Lookonchain, on-chain data revealed that at least three administrators from cryptocurrency-related subreddits sold tokens 20 to 30 minutes prior to the public announcement.
— Lookonchain (@lookonchain) October 19, 2023
Moderator Responses and Prior Knowledge
In response to these findings, a collective statement from Reddit moderators acknowledged they had received notice about the program’s termination one hour before the public announcement. This revelation suggests that some moderators may have utilized their advanced knowledge to dispose of their token holdings.
The suspicions surrounding these token movements have further fueled the controversy surrounding Reddit’s decision to terminate the blockchain-based community points program.