EOS’ 2018 $4.4 billion token offering tampered with using 21 different crypto addresses, according to new information.
- 21 accounts aided in the multibillion-dollar EOS campaign, according to a new analysis.
- The article discovered evidence of irregularities during the token offering in the form of “strange trades.”
- In 2018, the EOS token sale raised $4.4 billion, making it the most extensive initial coin offering (ICO) of all time and a source of much controversy.
Now, new research by finance professor John Griffin of the University of Texas at Austin McCombs School of Business and forensic analysis firm Integra FEC has uncovered new evidence of anomalies. These pieces of evidence are in the form of a pattern of “strange trades” during the ICO.
Griffin, who previously researched the stablecoin Tether, believes that these transactions “inflated” the price of EOS. The inflated price may have enticed unknowing investors to buy into the currency. This is what he claims in the article published on Tuesday.
He explained to Decrypt that it was one of the largest ICOs with a unique mechanism for generating funds. He went on to say that the research could have regulatory ramifications. Prices should not be an assumption to represent accurate supply and demand. Investors can suffer losses.
Block.one’s Chief Technology Officer Dan Larimer and entrepreneur Brendan Blumer, an early cryptocurrency pioneer founded EOS. Investors such as Peter Thiel support this.
Block.one said in May that the proceeds of the sale along with other funds would build Bullish, a cryptocurrency exchange. The exchange recently announced a $9 billion agreement with a particular purpose acquisition firm. Furthermore, it intends to go public later this year.
Large EOS Purchase
Griffin discovered 21 crypto addresses involved in repeated, substantial purchases of EOS. Sales of the EOS token followed in fast succession—a behavior he refers to as recycling.
He calculates a recycled total of $814.6 million in this manner. The actual number, on the other hand, may be far greater.
Griffin stated that he received no pay for his paper and has no bitcoin holdings.
Block.one reacted to the charges by citing a July 2021 report by the legal firm Clifford Chance. The report stated that it “found no evidence of any arrangements between Block.one and third parties by which third parties purchased tokens on Block.one’s behalf.”
Block.one commissioned the investigation in 2019 in response to allegations that the corporation purchased its tokens during the sale.
Experts, like Cornell Law School Professor Robert Hockett, have endorsed Griffin’s findings.
As far as Hockett was concerned, the conduct documented in Griffin’s report could be illegal under US law. It prohibits fraud and deception. He told Bloomberg that there should be an investigation by the Securities and Exchange Commission (SEC) and Department of Justice (DOJ).
Targeting SEC’s Attention
In 2019, the SEC fined Block.one $24 million because it didn’t register its ICO (ICO).
Block.one made false and deceptive statements concerning EOS. This is according to a complaint filed last year by token holders. They claim that Block.one broke securities laws by artificially inflating the value of EOS tokens. In June, there was a reached settlement of $27.5 million in the class action.
One source stated that the ICO money (which totaled more than the three largest venture capital rounds of 2018 combined) would develop tools to accelerate the adoption of blockchain technology.
However, the EOS platform has fallen short of its expectations.
The platform touted as an Ethereum competitor. However, it experienced congestion issues, experts questioned the project’s claims to be decentralized, and data by VC company Outlier Ventures projected a colossal migration of engineers from the network in June 2020.
In April 2018, the token hit a high of $21.54 and is presently trading at $5.48.