Report Claims EOS and Block.one Recycled ETH During ICO to Simulate Demand
During the year-long Dutch auction token sale, EOS prices and bidding saw significant outperformance, but sparked suspicions that the rally was fueled by recycling the funds of the ICO to fake higher demand.
The EOS token sale, which took place in 2017 and 2018, may have been fueled by recycled Ethereum (ETH) funds. New evidence surfaced that Block.one may have directly spent the ETH to boost the demand for EOS tokens.
A recent report by Alethio Data Science shows that there may be significant grounds for that speculation. The startup, formed under the guidance of ConsenSys, has tracked blockchain activity to give additional evidence that daily auctions and market prices for EOS may have been tampered with during the token sale.
Block.one allegedly raised the equivalent of $4 billion, with no data on how the funds have been spent following the launch of the EOS code.
“During the EOS token sale, funds were permitted to be transferred out of the token sale wallet before the token sale ended. Just five days after the beginning of the token sale, block.one first withdrew funds from the token sale wallet, and continued to withdraw throughout the crowdsale,” noted Alethio Data.
The data collection happened between blocks 3,904,416 and 5,810,294, during the time of the EOS crowdsale.
EOS is one of the assets with significant inflows of funds from Ethereum. Its market price has moved close to the daily auction price. Even after the token sale ended, the EOS market price remained surprisingly stable despite the bear market, hovering between $4 and $6 for months.
What is even more curious is that Block.one withdrew most of the ICO funds during the crowdsale:
“In total, EOS withdrew funds 99 times, 93 of which occurred within the token sale time frame. Those 93 transfers accounted for approximately 7.75 million ETH withdrawn from their funding wallet, which is 90.8% of the total funds raised through the sale. In this time window, funds were withdrawn, on average, every 3.8 days.”
This observation, which saw ETH constantly flowing in and out of the wallet, made Alethio conclude that there exists a possibility the ICO did not raise as many funds and used a smaller amount of ETH constantly recycled to simulate demand.
Additionally, the research showed significant flows of funds between the EOS Ethereum address for the ICO, and the Bitfinex_4 ETH wallet. Because EOS tokens were unlocked during the year-long ICO, and Ethereum funds were on the move, it is believed that EOS price may also have been manipulated with ETH injections.