Reddit’s Crypto Points Program Controversy

Reddit announced on October 17 that it would discontinue its blockchain-based community points program, citing scalability issues.

The announcement sparked controversy in the cryptocurrency community, with many referring to it as a “rug pull” as the price of the native token on various subreddits plummeted in response.

Every subreddit possessed its own native token. Moons (MOON) was the native crypto asset of the r/CryptoCurrency board, while Bricks (BRICK) was the native crypto asset of the r/FortNiteBR subreddit.

These points could be spent on badges and exclusive products for avatars. The moderators of the majority of subreddits involved with the community points program claimed ignorance of the decision at the time of the announcement.

New on-chain data suggests, however, that at least a couple of moderators possessing Moon tokens may have been linked to three wallets that dumped millions of the tokens shortly before the official announcement.

On-chain analysts such as Pledditor were the first to bring attention to the subreddit moderator’s actions. On-chain data reveals that this moderator traded more than 23,000 ETH for more than 100,000 moons in two separate transactions on the Arbitrum Nova blockchain.

Subsequently, the user purged all previous Reddit posts. “rider_of_the_storm,” a different moderator, allegedly transferred 345,422 Moons, worth over $69,000 at the time, to an exchange address just 17 minutes before Reddit’s open statement.

Since then, the relevant Reddit account has been deactivated. According to Lookonchain, on-chain data revealed that at least three administrators of the cryptocurrency subreddit liquidated tokens approximately 20 to 30 minutes before the announcement’s public release.

A cumulative statement from the Reddit moderators clarified that they received notice of the termination of the community points program an hour earlier, indicating that at least three moderators may have used the prior information to sell their token holdings.