Mystiko Network accused of insider trading in second airdrop  

Mystiko Network’s second airdrop was overshadowed by allegations of insider trading after a few select wallets collected more airdrop tokens than regular users.

The accusations began with an X post by blockchain reporter Colin Wu, which highlighted suspicious activity involving newly created addresses and large token distributions.

According to the community, Mystiko Network is suspected of engaging in large amounts of insider trading in the 2nd Airdrop. Official Mystiko-Vault Community Incentives: 0xBc…25d6 distributed 20 million XZK to 1,487 newly created addresses via the Multisender app at 16:22 UTC on July…

— Wu Blockchain (@WuBlockchain) July 25, 2024

Specifically, Mystiko Network’s second airdrop is designed to reward holders of vXZK, the ERC-20 wrapped version of XZK that acts as the governance token. The team revealed that the second airdrop was distributed from June 30 to July 17, according to a snapshot of vXZK balances.

Interestingly, citing on-chain data, Wu revealed that on July 5, the official Mystiko-Vault Community Incentives wallet moved 20 million XZK tokens to 1,487 newly created addresses using Multisender, a crypto app that allows market participants to send tokens to multiple addresses.

The new addresses then received gas funds from major exchanges like OKX or Bybit just a day after receiving the airdrop. The community attributed such coordinated actions to an arrangement aimed at favoring insiders, who then benefited from these significant token allocations.

Additionally, the number of airdropped tokens received by these new addresses was significantly higher than that of regular users, leading to accusations of insider trading. The incident has intensified scrutiny on Mystiko Network, especially since the project raised $18 million in a funding round led by Sequoia Capital India in March.

Mystiko Network responds

In response to these allegations, the Mystiko Network team released a statement about X, addressing the community’s concerns and outlining the steps they will be taking to investigate the matter.

Transparency and community trust are paramount at Mystiko Network. We have recently become aware of allegations of certain transactions involving our tokens. Here is our response:

1. Mystiko became aware of these allegations and immediately launched an internal investigation…

— Mystiko.Network (@MystikoNetwork) July 25, 2024

Mystiko said it immediately launched an internal investigation after learning of the allegations. The investigation confirmed the existence of the addresses in question and reviewed their transaction history.

The team highlighted that these addresses meet the criteria for early contributors to the ecosystem, performing multiple transactions within the network. This marks the second airdrop controversy in two months following the lack of anti-Sybil concerns surrounding the zkSync airdrop.

Meanwhile, the Mystiko Network has continued to attract over 150,000 users and over $276 million in transaction volume since the mainnet launch in March 2023.

Let’s take a look at Mystiko’s current stats.

Mystiko V1 was launched on Mainnet in March 2023 and has been securely deployed on the following networks:
✅$276,710,654 trading volume
✅ 153,790 unique users
✅ Total 1,293,994 transactions
On 6 Chains: Ethereum, BASE, Polygon, BSC, Avalanche, Linea.
✅ More… pic.twitter.com/rE0qdWFHj1

— Mystiko.Network (@MystikoNetwork) July 16, 2024