The Reddit r/CryptoCurrency community has taken significant action, ousting two moderators for their involvement in what appears to be insider trading of Moons (MOON) tokens.
The sequence of events unfolded with at least three wallets linked to moderators from Reddit groups executing substantial token sales on 18 October, mere moments before the official announcement of the termination of Reddit’s blockchain-based points programme.
This programme was tied to the utilisation of specific cryptocurrencies unique to each subreddit community.
The on-chain analytics community, notably on platforms such as X (formerly Twitter), with accounts like Lookonchain, swiftly identified the market activity initiated by these wallets.
What stands out is the fact that these Reddit moderators were privy to the programme’s cessation an hour prior to the official announcement, and they seized the opportunity to sell their holdings just in time to yield considerable gains, unlike the unsuspecting user base.
Although Reddit attributed its decision to cease the programme to scalability challenges and a regulatory environment filled with uncertainty, the moderators’ actions have ignited a flurry of inquiries among users.
Reddit user giddyup281 promptly questioned the moderators, asking:
“How many admins sold before the news?”
User 2LostFlamingos wrote:
“You let everyone build up positions, list them on kraken, add liquidity using their own outside funds. And then you just lit it all on fire.”
The Reddit community adopted familiar terminology like “rug pull” to describe Reddit’s actions, while some went further, levying accusations of insider trading against the social media platform.
The resulting backlash has ignited concerns regarding the platform’s governance integrity, with certain Reddit users even advocating for securities fraud charges.
User Bucksaway03 commented:
“The trust is gone, even if you got the contract, the trust is gone… those who sold before the announcement should be reported to the SEC. Removing ones self isn’t an acceptable outcome for insider trading.”
U/mellon, a core contributor and founder of MoonDust, disclosed that two moderators had been removed from their positions, with an ongoing inquiry involving three others.
The now-terminated programme was designed to empower platform participants to earn points, which they could subsequently utilise for various purposes using community-specific crypto tokens such as MOON.
This was exemplified in the r/CryptoCurrency subreddit, where users were rewarded with MOON, an ERC-20 token, for posting or commenting, with the flexibility to exchange, tip, or engage in other community activities using these tokens.