CoinMarketCap airdrop scandal: projects claim fraud

CoinMarketCap airdrop scandal: projects claim fraud

10.01.2023 11:10 (Updated 10.01.2023 11:01)
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by Yana Popenkova
2 min read

Several crypto projects reported a sharp drop in price after CoinMarketCap failed to run fair promotional token airdrop campaigns. CoinMarketCap responded to the allegations.

TokenBot and SaTT accused CoinMarketCap of manipulating the paid promotional token drops in favor of some wallets. Promotional drops are originally planned to distribute tokens to thousands of users to generate interest in the projects.

In December 2022, blockchain advertising project SaTT paid CoinMarketCap to distribute to 25,000 winners 4,000 SATT each, worth $6.30 at the time of the promotion, according to CoinGecko data.

However, as SaTT claims, 20,953 wallets automatically transferred tokens to 21 wallet addresses shortly after the airdrop was distributed. These wallets then sold their token holdings a few days later, around December 10, earning the owners of these 21 wallets approximately $142,000.

The rapid sell-off caused the price of SATT to drop 70% between the end of the airdrop on December 1 and when the tokens were sold on December 10.

Those allegations are supported by the TokenBot project CEO, Shaun Newsum, who witnessed the same pattern in the recent token drop with CoinMarketCap. Newsum claims that, according to the airdrop terms, CoinMarketCap provided 30,000 winners, and the CEO decided to reward them steadily with TKB.

Yet, after the first batch of 4,000 winners received the tokens, around 3,300 of them sent TKB to one wallet address. TokenBot lost around $20,000 in this incident, and the project had to turn to its treasury to cover the liquidity hole.

Shaun Newsum said:

Obviously some person figured out how to game CMC (CoinMarketCap). If we were to have bulk sent, the whole airdrop would’ve been a complete disaster.

CoinMarketCap representative addressed the issues, stressing the failure of crypto trading bots:

The industry has been facing this issue among airdrop programs for some time and the reality is that not a single industry has been able to solve the bot issue entirely.

CMC also points out that it will employ some bot protections in the future drops, such as CAPTCHA and email verification by participants, as well as two-factor authentication.

Author

  • Previously worked in the arts, now specializes in covering crypto with an emphasis on DeFi, blockchain and mass adoption. Offers simple and clear writing, always looking for new ways to present information. Major in International Relations, minor in English, in a spare time reads postmodern literature, does yoga and watches movies.

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