Fighting FUD During Crypto Winter
This week has been one of the hardest in years for cryptocurrency investors, as there’s been a flurry of negative news and scary liquidations going on with the VCs. Unfortunately, it’s in these times that FUD ignites like wildfire, misinformation spreads like gossip, and tokens take their biggest losses.
Regardless, all market participants still need to be careful and extra prudent about sometimes misleading and false news such as rug pulls, liquidations, and scams. Of course, when the markets are tanking it’s easy for the critics to make these assertions, but the same is happening in the traditional markets as well — and all crypto coins experience it at some point in their lifecycle. For example, how many times has Bitcoin been declared dead?
But the entire world economy is in an unforeseen predicament, and only the greatest of companies and projects will make it out alive or even stronger. One of those projects is the Internet Computer.
The Internet Computer, and the Dfinity Foundation in particular, despite being a top 50 project and top 15 smart contract platform, have also come under such attacks.
In fact, a coordinated attack began nearly one year ago today, and it stemmed from a newly registered and less than a five-employee company called Arkham Intelligence, who released a misleading report about the ICP token’s price performance from genesis (May 10, 2021) through the crypto crash of summer 2021.
Contents Of The Arkham Report
The primary hypothesis in their report was that Dfinity collaborated with exchanges such as Coinbase, Binance, Huobi, and OKex to dump ICP tokens on the market immediately after the project’s genesis release and during the crypto crash that took place during the time.
Going off of that, they performed an “on-chain” analysis where they said they examined the Internet Computer blockchain and found that the Dfinity treasury deposited 18.9 million ICP tokens to the exchanges to be presumably sold. Moreover, when this happened it misled and tricked the Internet Computer’s seed supporters who were locked out of their tokens.
The most worrying thing about this report and company was that they got the New York Times and CoinTelegraph to link to and reference their report, which is not typical of these well-established companies, especially the New York Times.
In addition, Arkham said that Dfinity was not transparent about how the ICP tokens were distributed and how the unlocking schedule would take place. Arkham said the Internet Computer’s tokenomics were “contrary to industry best practices.”
Lastly, they ended their report by stating that Dfinity insiders made billions of dollars dumping ICP on the market, but ended their report also making the claim that “we must note that we cannot definitely say that ICP insiders carried out a pump-and-dump or a rug pull.”
So going off of these two assertions, it’s very unfortunate that a random FUD report could be so widely cited and spread by respected news outlets, especially given the unfounded contents and impreciseness of the “on-chain” analysis cited in the report.
During hard market times, there are many actors in the ecosystem who are looking to shill their own project at the expense of another, especially a competitor. But luckily, there’s been a release of two case studies from a movement called Crypto Leaks that have counter-argued the content in the Arkham publication.
Two reports were released that seemed to defend what happened to the ICP token’s price during that time and cited specific examples of perpetual contract trading on the FTX exchange right at the time the coin was crashing. In particular, they showed a huge spike in perpetual contract trading being done by the exchange, which sent the token skyrocketing into false price discovery mode, and obviously out of market value, given that the token’s market cap rose to multiple hundred billion in the span of a few days.
Moreover, further down in the report the author discovered questionable actions and suspicious activity from Arkham Intelligence and Solana, which is a direct competitor and was obviously threatened by a new token shooting past its market cap and gaining popularity.
So as a takeaway, it’s important to remember that click-bait stories that are not vetted often reach the headlines. For example, Litecoin partnered with Walmart and Amazon, and celebrities gave away Bitcoin and Ethereum. Moreover, many of these stories are influenced by VC arms and other marketing agencies, so it’s important to get your information from trusted sources and to connect with the project teams directly. The Internet Computer is a well-established project and has a large team of respected cryptographers, engineers, and computer scientists. It’s not a come-and-goer, and thus it’s necessary to differentiate the Internet Computer from projects such as Squid Token.
The Internet Computer is building something for the future and has been around through all the ups and downs in crypto. There are levels to this.