“All the moderators who sold Moons before the announcement have already been removed from the mod team,” r/CryptoCurrency told CoinDesk in a Twitter message.
On Tuesday at 13:02 EST (17:02 UTC), Reddit shuttered community points – a blockchain-based internet points program designed to reward creators and developers – citing scalability issues. The program allowed users to earn and spend community points through native tokens like MOON.
Roughly 30 minutes before the announcement, moderators, with the insider information of the impending news, sold 456,353 MOON, then worth $92,000, according to data tracked by onchain sleuth Lookonchain. Another large tranche of 363,227 MOON hit the market two minutes before the announcement, adding to the selling pressure.
MOON, an ERC-20 token, is distributed as a reward to users for their posts or comments in the r/CryptoCurrency subreddit and can be freely traded, tipped, or spent in the community for different purposes. The token fell over 85% to $0.0198 on the back of the Reddit announcement.
Moderators were informed of Reddit's impending decision one hour in advance, as per the r/CryptoCurrencyMoons subreddit. The episode highlights challenges in policing cryptocurrency markets.
The insider trading enraged many in the investor community, with some calling for regulatory action against moderators while others raising question marks on Reddit’s decision to inform moderators in advance.
“Those who sold before the announcement should be reported to the SEC. Removing ones self isn't an acceptable outcome for insider trading,” Bucksaway03 said.
"At least everyone would have been on the same playing field if Reddit just blindsided everyone, including the mods," Lord-Nagafen said.
The r/CryptoCurrency subreddit is now brainstorming about the future of the MOON token.
"There is a proposal to solve the situation by u/mellon98 – core contributor and MoonsDust’s founder, and we're brainstorming about Moons' future —waiting for Reddit's decision on whether they'll transfer the contract to us or a burn address," r/CryptoCurrency said.
Either way, Moons are here to stay," r/CryptoCurrency added.
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