Cryptocurrency

Arbitrum

Mystiko Network

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Mystiko Network has been hit by insider trading allegations by the community following its second airdrop.
Widespread community outrage erupted following the second Mystiko Network (XZK) token <a href="https://cointelegraph.com/news/what-is-a-crypto-airdrop-and-how-does-it-work" rel="noopener noreferrer nofollow">airdrop</a> when the community noticed that two addresses received significantly more tokens than most other participants.
Notably, wallet “0xBca” received 59,570 XZK ($1,787) while wallet “oxda8” was airdropped 60,325 XZK tokens ($2,170), according to blockchain <a href="https://etherscan.io/token/0xe8fc52b1bb3a40fd8889c0f8f75879676310ddf0?a=0xbcaca26cea5e68c7265998ceaed97e8b29bc25d6" target="_blank" rel="noopener noreferrer nofollow">data</a>.
Yet, the majority of the other airdrop participants have received between 400 to 5,740 XZK tokens, worth up to $172.
<figure><img src="https://s3.cointelegraph.com/uploads/2024-07/17f82ac9-dbf2-4784-9865-6169ab46649b.png" alt="Insider trading allegations hit Mystiko Network airdrop">
 <figcaption style="text-align: center;">XZK airdrop claims. Source: Etherscan.io
 </figcaption>
</figure>
Cryptocurrency airdrops have come under scrutiny in 2024 since many of them are riddled with professional airdrop hunters (or squatters) that farm the same airdrop with multiple cryptocurrency wallets with no intention of using the protocol in the long term and market selling the rewards.
Related: <a href="https://cointelegraph.com/news/bitget-second-most-popular-wallet-japan" rel="noopener noreferrer nofollow">Airdrop success propels Bitget wallet to second most popular in Japan</a>
<h2 id="the-two-wallet-addresses-are-core-community-members-claims-mystiko-network">The two wallet addresses are core community members, claims Mystiko network</h2>
When asked about the insider trading allegations, Mystiko Discord moderator Ellie said that the claims were “baseless” but refused to elaborate further:
<blockquote data-ct-non-breakable="true">
 “You can see our public Twitter response. It’s completely baseless and it takes 1 search on the Blockchain to see it's not true.”
</blockquote>
In its public response, Mystiko Network claimed that the two addresses that received substantially more rewards were early protocol contributors, according to a July 25 X <a href="https://x.com/MystikoNetwork/status/1816382369995366427" target="_blank" rel="noopener noreferrer nofollow">post</a>:
<blockquote data-ct-non-breakable="true">
 “These addresses appear to be aligned with criteria established for early contributors to our ecosystem, with multiple transactions within the network.”
</blockquote>
Mystiko also provided onchain evidence of the two wallets’ early interactions with the protocol, but Cointelegraph was unable to verify whether these wallets belonged to insiders or regular users.
<figure><img src="https://s3.cointelegraph.com/uploads/2024-07/539abba6-7488-47ac-bce4-ad9b6630053b.png" alt="Insider trading allegations hit Mystiko Network airdrop">
 <figcaption style="text-align: center;">Mystiko Network, response to insider allegations. Source: Mystiko.Network
 </figcaption>
</figure>
Related: <a href="https://cointelegraph.com/news/biden-exit-bitcoin-price-surge-68k" rel="noopener noreferrer nofollow">Why Biden’s exit from the elections briefly pushed Bitcoin price to $68K</a>
<h2 id="are-crypto-airdrops-hurting-the-defi-ecosystem-in-the-long-term">Are crypto airdrops hurting the DeFi ecosystem in the long term?</h2>
Cryptocurrency airdrops may be hurting <a href="https://cointelegraph.com/learn/defi-a-comprehensive-guide-to-decentralized-finance" rel="noopener noreferrer nofollow">decentralized finance (DeFi)</a> protocols and the wider ecosystem in the long term.
This is because a large portion of airdrops are filled with squatters who simply market sell the rewards, creating downward pressure, without ever using the protocol after the rewards.
In February, pseudonymous Yearn.finance developer Banteg <a href="https://twitter.com/bantg/status/1759923340737716287" target="_blank" rel="noopener noreferrer nofollow">warned</a> that Starknet’s airdrop eligibility list mainly included airdrop squatters. Approximately 701,544 of the 1.3 million eligible wallet addresses were <a href="https://cointelegraph.com/news/starknet-populated-airdrop-hunters-ahead-token-launch-report" rel="noopener noreferrer nofollow">allegedly linked to repeat or renamed</a> GitHub accounts controlled by airdrop squatters.
In March 2023, it was revealed that airdrop hunters <a href="https://cointelegraph.com/news/arbitrum-airdrop-sees-1-500-addresses-consolidate-3-3m-into-two-wallets" rel="noopener noreferrer nofollow">consolidated $3.3 million worth of tokens</a> from the then Arbitrum (<a href="https://cointelegraph.com/arbitrum-price-index" rel="noopener noreferrer nofollow">ARB</a>) airdrop from 1,496 wallets into just two wallets they had controlled.
Magazine: <a href="https://cointelegraph.com/magazine/thorchain-founder-jp-thor-vampire-attack-defi/" rel="noopener noreferrer nofollow">THORChain founder and his plan to ‘vampire attack’ all of DeFi</a>

Insider trading allegations hit Mystiko Network airdrop

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