Paul Faecks, founder of Plasma, dismissed claims of insider selling following a significant drop of over 50% in the value of the project’s native token, XPL, over the weekend.
On Thursday, Faecks rejected allegations that the team sold tokens on the market, clarifying that both investor and team allocations are locked for three years with a one-year cliff. “No team members have sold any XPL,” he asserted.
On September 25, Plasma officially launched its mainnet beta alongside its native Plasma (XPL) token. The layer-1 blockchain aims to facilitate cheaper and faster stablecoin payments.
Post-launch, XPL surged to nearly $1.70 on Sunday before progressively declining to $0.83 by Wednesday, losing more than 50% in value, according to data from TradingView.
Community concerns and onchain investigations
The steep decline led many community members to suspect that the team might have engaged in time-weighted average price (TWAP) selling, an algorithmic strategy where a large sell order is divided into smaller, equally sized orders executed at regular intervals.
In response to the drop, community members turned to onchain analysis to track the flows of XPL.
Independent investigator ManaMoon highlighted movements from the Plasma team vault, indicating that the wallet transferred over 600 million XPL tokens to exchanges in the days prior to the launch.
“In my opinion, someone was TWAP selling an excessive quantity of tokens that retail investors couldn’t withstand,” ManaMoon stated.
A community member named crypto_popseye accused both the team and the algorithmic trading firm Wintermute of causing the price crash. “Plasma $xpl essentially wrecked their chart and momentum, and I hope their project fails,” he remarked.
In spite of the community’s complaints, the Plasma team denied any links with Wintermute, stating that they have access to the same information as the public.
“We have not utilized Wintermute as a market maker and have never engaged them for any of their services,” Faecks clarified. “We possess the same information as the public about Wintermute’s ownership of XPL.”
Related: Aster reimburses users after XPL perpetual glitch sends price to $4
Community probes ecosystem and growth tokens
In response to Faecks’ statement, crypto_popseye questioned the founder’s wording. The community member alleged that Faecks’ language implied no team sales but left the status of other token categories, such as “ecosystem and growth” tokens, ambiguous.
“It’s quite evident they’ve been sold, yet your phrasing implies they haven’t,” the user claimed.
Faecks maintained that their team is “laser-focused on building the future of money” and declined to provide further comments.
Cointelegraph reached out to the Plasma team for comments, but did not receive a response by publication.
Magazine: Forget The Terminator: SingularityNET’s Janet Adams is building AGI with heart
