DeFi Development Corp., a Nasdaq-listed firm linked to Solana’s treasury, is facing allegations of insider trading following the launch of a meme coin.
The controversy centers on a digital wallet that purchased a significant portion of the new $DONT token before the official announcement, sparking suspicions of early access and information leaks.
Early purchases raise red flags
Blockchain analysis revealed that a Solana-linked wallet began buying $DONT tokens shortly after the coin’s creation but well before the public launch announcement. At approximately 8:30 a.m.
Eastern Time, the company officially released news about the $DONT token on social media and X, with the asset gaining visibility among investors.
However, on-chain data shows that transactions involving the token occurred well before this announcement.
A wallet, identified by the address ending in “8FziB,” had accumulated billions of tokens about 25 minutes after launch, before the official statement.
This wallet spent around $4,100 to acquire approximately 29 billion $DONT tokens, accounting for nearly 7% of the total supply.
Suspicious connections to the Solana network
As the $DONT token gained attention and its value soared, investigators traced the funds used for early purchases.
They found a pattern suggesting that several Solana addresses, potentially linked to DeFi Development Corp., were involved in transferring funds to the wallet that made the purchases.
These transactions raised concerns about possible insider knowledge and unfair advantage. Additionally, one of the wallets tied to the early purchases was connected to a staking asset related to DeFi Development Corp.
Analysts also discovered that this wallet interacted with a Solana validation node managed by the firm.
Token burn and market reaction
In response to the controversy, DeFi Development Corp. conducted an internal review of the $DONT token’s release and the subsequent trading activity.
The firm referred to the wallet’s early purchases as the work of an “early sniper,” a term used to describe traders who buy up tokens immediately after they hit the market.
After public scrutiny of the initial trades, the company decided to burn over 17 billion $DONT tokens, a move that partially restored market confidence.
The news of the token destruction caused $DONT’s price to surge within hours. However, the company’s stock price failed to see similar gains, remaining well below six-month highs.
DeFi Development Corp. has yet to provide definitive answers regarding its connection to the early token purchases, but its efforts to burn tokens have drawn attention to the regulatory challenges that cryptocurrency projects face.
The incident has raised questions about the integrity of the DeFi space and whether adequate safeguards are in place to prevent insider trading.
While the company has denied any direct involvement in the suspicious activity, the case remains under investigation.
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