06-30-2021, 01:11 PM
Is ICP a Scam? Arkham Intelligence Looked Into It
<!-- SC_OFF --><div class="md"><p><strong>A Summary of Arkham Intelligence’s Takedown of ICP</strong> </p> <p><a href="https://arkhamintelligence.com/icp/report.pdf">Link to the article</a></p> <p>​</p> <ul> <li>ICP dropped from it’s ATH of $730 to $30</li> <li>It ascended to the 3rd most valuable crypto asset</li> <li><strong>DFinity</strong> is the company behind ICP</li> </ul> <p>On-Chain Analysis</p> <ul> <li>The addresses in question belong to 3 entities: Dfinity, exchanges, and suspected insiders</li> <li>The “Treasury” is the address Arkham believes belongs to Dfinity, and it received 107 million ICP from the mint(about 25% of total supply)</li> <li>There are two types of exchange addresses: central addresses and deposit addresses <ul> <li>In a nutshell, central addresses are the pot of ICP that an exchange holds</li> <li>Deposit addresses hold crypto for a short time before transferring to central addresses</li> </ul></li> <li>The suspected insiders are some addresses that either received ICP from the Treasury or deposited ICP to a deposit address also used by the Treasury.</li> <li>Arkham tracked exchange flows and found that the Treasury deposited 3.1 million ICP to exchanges on May 10 and 4.7 million on June 15th <ul> <li>The exchange deposits on May 10 are typical for providing liquidity on exchanges</li> <li>The deposits on June 15</li> </ul></li> <li>There are 34 suspected insiders that also deposited a lot of ICP to exchanges <ul> <li>They were sent 34.1 million ICP in total</li> <li>About 75% of these transfers occurred within 3 hours of trading open on Coinbase</li> <li>The deposits by insiders are made in different amounts, to different exchanges, leading to the assumption that there is no single underlying entity.</li> <li>Despite this, many insiders made a large transfer on listing day followed by intermittent deposits post-listing</li> <li>They followed this pattern:</li> </ul></li> </ul> <ol> <li>Treasury sends 62.5k ICP to insider 2 hours before trading opens</li> <li>Insider sends 62k ICP to Coinbase/Binance addresses over the course of 5 days after listing</li> <li>Exchanges move this ICP to central addresses within 20 mins of deposit</li> </ol> <p><strong>Implications</strong></p> <ul> <li>The Treasury and insiders sent about 75% of the total ICP deposited on exchanges.</li> <li>We can only assume these tokens were sold, as there is no “direct and clear” evidence that they were.</li> <li>The assumption is safe because:</li> </ul> <ol> <li>The price plummeted as these deposits were made</li> <li>The only thing to do with ICP on an exchange is to sell it</li> </ol> <ul> <li>A possible counter argument is that they wanted to use Coinbase for token custody <ul> <li>This is unlikely because the token holders (Dfinity and insiders) would most likely have the capability to securely store tokens and they would have been incentivized to store them in a way that maintained their custody of them(at the time of the dump, their tokens were worth hundreds of millions).</li> <li>Secondly, <strong>ICP protocol distributes ICP rewards to holders who lock their tokens in the network</strong>. If there is no intent to sell, holders are incentivized to earn rewards rather than store them on exchanges</li> <li>Thirdly, and most simply, the historic price drop indicates mass selling.</li> </ul></li> </ul> <p><strong>Off-Chain Analysis</strong></p> <ul> <li>There was a lack of transparency regarding token allocation and unlocking as there is very little public information in the way of token unlock schedules</li> <li>Contrast this to UniSwap, who released breakdowns for allocation by category of holder, and a breakdown of the unlocking of the treasury</li> <li>Dfinity’s founder sent a twitter reply claiming: <ul> <li>“Foundation didn't vest itself but plans on putting most of its ICP into neurons. It is doing this carefully to make sure foundation+team members don't control the network (you wouldn't believe it based upon what you hear, but in actual fact, we care a lot about decentralization!)”</li> </ul></li> <li><strong>Having no vesting essentially means that token holders are less incentivized to hold their tokens should something happen with the project(like a rug pull, team dump, or VC dump)</strong></li> </ul> <p><strong>Seed Supporter’s Struggles</strong></p> <ul> <li>At time of launch, seed supporters were entitled to about 25% of the total ICP</li> <li><strong>These initial investors seem to not have been aware of how to access their tokens or how the tokens would unlock until listing day</strong></li> <li>Dfinity published an article on Medium on how to access seed tokens <ul> <li>This article explains that seed investors would be subject to a 4-year unlocking schedule: <ul> <li>“Seed donors will receive all of their ICP tokens at Genesis Unlock, but these will be staked inside 49voting neurons within the NNS. Each neuron that is delivered will have a different “dissolve delay”configured by the NNS. This configures the minimum period required to unlock the ICP tokens staked inside. One of their neurons will have a dissolve delay of 0 days, allowing the staked ICP tokens to be unlocked immediately, if desired (subject to applicableAML/KYC verification). Another will have a dissolve delay of approximately 30 days, another of 60 days, another of 90 days, and so on.(Note:Configured dissolve delays may have some small random number of days added or subtracted by the NNS).” </li> </ul></li> </ul></li> <li>The provided set of steps to retrieve seed tokens is complicated and technical, with users reporting bugs. <ul> <li><strong>The steps could not be performed on Windows or new Macs with M1 chips</strong></li> </ul></li> <li>Dfinity support was unsurprisingly lacking <ul> <li>Users on the support forum report being redirected back to the forum after submitting tickets for their issues</li> <li>Some users report buying new computers to access their tokens.</li> </ul></li> <li>If Dfinity intended to dump, it would make sense to effectively disallow seed investors to access and sell their tokens</li> <li>Many seed investors were forced to watch as they watched what would have been a life-changing investment slip through their fingers</li> </ul> <p><strong>Implications</strong></p> <ul> <li>Any one of these pieces of evidence may easily be swept under the rug as a new project fumbling through release.</li> <li>As the pieces come together, it seems clear that there was intent behind all of these events.</li> <li>This rug pull event stresses the need for better analytics on cryptocurrencies <ul> <li>ICP buyers should have known about suspicious token flows and off-chain activity.</li> </ul></li> </ul> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/dmiddy"> /u/dmiddy </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/oalsuj/is_icp_a_scam_arkham_intelligence_looked_into_it/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/oalsuj/is_icp_a_scam_arkham_intelligence_looked_into_it/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p><strong>A Summary of Arkham Intelligence’s Takedown of ICP</strong> </p> <p><a href="https://arkhamintelligence.com/icp/report.pdf">Link to the article</a></p> <p>​</p> <ul> <li>ICP dropped from it’s ATH of $730 to $30</li> <li>It ascended to the 3rd most valuable crypto asset</li> <li><strong>DFinity</strong> is the company behind ICP</li> </ul> <p>On-Chain Analysis</p> <ul> <li>The addresses in question belong to 3 entities: Dfinity, exchanges, and suspected insiders</li> <li>The “Treasury” is the address Arkham believes belongs to Dfinity, and it received 107 million ICP from the mint(about 25% of total supply)</li> <li>There are two types of exchange addresses: central addresses and deposit addresses <ul> <li>In a nutshell, central addresses are the pot of ICP that an exchange holds</li> <li>Deposit addresses hold crypto for a short time before transferring to central addresses</li> </ul></li> <li>The suspected insiders are some addresses that either received ICP from the Treasury or deposited ICP to a deposit address also used by the Treasury.</li> <li>Arkham tracked exchange flows and found that the Treasury deposited 3.1 million ICP to exchanges on May 10 and 4.7 million on June 15th <ul> <li>The exchange deposits on May 10 are typical for providing liquidity on exchanges</li> <li>The deposits on June 15</li> </ul></li> <li>There are 34 suspected insiders that also deposited a lot of ICP to exchanges <ul> <li>They were sent 34.1 million ICP in total</li> <li>About 75% of these transfers occurred within 3 hours of trading open on Coinbase</li> <li>The deposits by insiders are made in different amounts, to different exchanges, leading to the assumption that there is no single underlying entity.</li> <li>Despite this, many insiders made a large transfer on listing day followed by intermittent deposits post-listing</li> <li>They followed this pattern:</li> </ul></li> </ul> <ol> <li>Treasury sends 62.5k ICP to insider 2 hours before trading opens</li> <li>Insider sends 62k ICP to Coinbase/Binance addresses over the course of 5 days after listing</li> <li>Exchanges move this ICP to central addresses within 20 mins of deposit</li> </ol> <p><strong>Implications</strong></p> <ul> <li>The Treasury and insiders sent about 75% of the total ICP deposited on exchanges.</li> <li>We can only assume these tokens were sold, as there is no “direct and clear” evidence that they were.</li> <li>The assumption is safe because:</li> </ul> <ol> <li>The price plummeted as these deposits were made</li> <li>The only thing to do with ICP on an exchange is to sell it</li> </ol> <ul> <li>A possible counter argument is that they wanted to use Coinbase for token custody <ul> <li>This is unlikely because the token holders (Dfinity and insiders) would most likely have the capability to securely store tokens and they would have been incentivized to store them in a way that maintained their custody of them(at the time of the dump, their tokens were worth hundreds of millions).</li> <li>Secondly, <strong>ICP protocol distributes ICP rewards to holders who lock their tokens in the network</strong>. If there is no intent to sell, holders are incentivized to earn rewards rather than store them on exchanges</li> <li>Thirdly, and most simply, the historic price drop indicates mass selling.</li> </ul></li> </ul> <p><strong>Off-Chain Analysis</strong></p> <ul> <li>There was a lack of transparency regarding token allocation and unlocking as there is very little public information in the way of token unlock schedules</li> <li>Contrast this to UniSwap, who released breakdowns for allocation by category of holder, and a breakdown of the unlocking of the treasury</li> <li>Dfinity’s founder sent a twitter reply claiming: <ul> <li>“Foundation didn't vest itself but plans on putting most of its ICP into neurons. It is doing this carefully to make sure foundation+team members don't control the network (you wouldn't believe it based upon what you hear, but in actual fact, we care a lot about decentralization!)”</li> </ul></li> <li><strong>Having no vesting essentially means that token holders are less incentivized to hold their tokens should something happen with the project(like a rug pull, team dump, or VC dump)</strong></li> </ul> <p><strong>Seed Supporter’s Struggles</strong></p> <ul> <li>At time of launch, seed supporters were entitled to about 25% of the total ICP</li> <li><strong>These initial investors seem to not have been aware of how to access their tokens or how the tokens would unlock until listing day</strong></li> <li>Dfinity published an article on Medium on how to access seed tokens <ul> <li>This article explains that seed investors would be subject to a 4-year unlocking schedule: <ul> <li>“Seed donors will receive all of their ICP tokens at Genesis Unlock, but these will be staked inside 49voting neurons within the NNS. Each neuron that is delivered will have a different “dissolve delay”configured by the NNS. This configures the minimum period required to unlock the ICP tokens staked inside. One of their neurons will have a dissolve delay of 0 days, allowing the staked ICP tokens to be unlocked immediately, if desired (subject to applicableAML/KYC verification). Another will have a dissolve delay of approximately 30 days, another of 60 days, another of 90 days, and so on.(Note:Configured dissolve delays may have some small random number of days added or subtracted by the NNS).” </li> </ul></li> </ul></li> <li>The provided set of steps to retrieve seed tokens is complicated and technical, with users reporting bugs. <ul> <li><strong>The steps could not be performed on Windows or new Macs with M1 chips</strong></li> </ul></li> <li>Dfinity support was unsurprisingly lacking <ul> <li>Users on the support forum report being redirected back to the forum after submitting tickets for their issues</li> <li>Some users report buying new computers to access their tokens.</li> </ul></li> <li>If Dfinity intended to dump, it would make sense to effectively disallow seed investors to access and sell their tokens</li> <li>Many seed investors were forced to watch as they watched what would have been a life-changing investment slip through their fingers</li> </ul> <p><strong>Implications</strong></p> <ul> <li>Any one of these pieces of evidence may easily be swept under the rug as a new project fumbling through release.</li> <li>As the pieces come together, it seems clear that there was intent behind all of these events.</li> <li>This rug pull event stresses the need for better analytics on cryptocurrencies <ul> <li>ICP buyers should have known about suspicious token flows and off-chain activity.</li> </ul></li> </ul> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/dmiddy"> /u/dmiddy </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/oalsuj/is_icp_a_scam_arkham_intelligence_looked_into_it/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/oalsuj/is_icp_a_scam_arkham_intelligence_looked_into_it/">[comments]</a></span>Kind Regards R