According to new research, the $4.4 billion EOS token raise was fueled by wash trading.

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According to new evidence, 21 crypto addresses were used to manipulate pricing during EOS’ $4.4 billion token raise in 2018.

In 2018, the EOS token sale raised $4.4 billion, making it the largest initial coin offering (ICO) of all time—but also a source of much controversy.

Now, a new paper, by University of Texas at Austin McCombs School of Business finance professor John Griffin and forensic analysis firm Integra FEC, has unearthed fresh evidence of irregularities in the form of a pattern of “suspicious trades” during the ICO.

Griffin, who previously researched the stablecoin Tether, believes that these transactions have “inflated” the price of EOS. The exaggerated price may have subsequently enticed unknowing investors to buy into the currency, he claims in the article, which was published on Tuesday.

“It was one of the largest ICOs and had a different mechanism for raising capital,” he told Decrypt. The research could have regulatory repercussions, he added. “One should not assume that prices simply represent real supply and real demand. Investors can get hurt.”

EOS was founded by’s chief technology officer Dan Larimer, an early cryptocurrency pioneer, and entrepreneur Brendan Blumer. It’s also backed by billionaire investors, including Peter Thiel.

Last May, said that the proceeds of the sale will be used, alongside other funding, to launch a cryptocurrency exchange, Bullish. The exchange recently signed a $9 billion deal with a special purpose acquisition company and is planning to go public later this year.

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Unusually large purchases of EOS

In his research, Griffin identified 21 crypto addresses that were involved in regular, unusually large purchases of EOS, followed, in rapid succession, by sales of the EOS token—a process he calls recycling.

EOS token sale
The EOS token sale was the biggest ICO of all time. Image: John Griffin.

He estimates that a total of $814.6 million was recycled in this way, noting that the actual amount could be much higher.

Griffin said that he did not receive compensation for his paper, and has no cryptocurrency holdings. responded to the allegations by pointing to a July 2021 report by the lawyers Clifford Chance which states it “found no evidence of any arrangements between and third parties by which third parties bought tokens on’s behalf.”

The study was commissioned by in 2019, after allegations that the company purchased its own tokens during the sale.

However, experts including Robert Hockett, a Cornell Law School Professor, who reviewed Griffin’s research, have backed his analysis.

Hockett called it “impeccable” and said that the actions described in Griffin’s report could violate U.S. law, which prohibits fraud and manipulative activities, if true. The Securities and Exchange Commission (SEC) and Department of Justice “should definitely be investigating,” he told Bloomberg.

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In the SEC’s crosshairs?

The SEC has already fined $24 million in 2019 for failing to register its ICO.

Meanwhile, token holders sued last year, alleging that the company violated securities laws by making “false and misleading statements about EOS, which artificially inflated the prices for the EOS securities and damaged unsuspecting investors.” A $27.5 million settlement was reached in the class action in June.

Block. According to one, the ICO money (which totalled more than the three largest venture capital rounds of 2018 combined) would be used to develop tools to accelerate the adoption of blockchain technology.

However, the EOS platform has fallen short of expectations.

The platform was touted as an Ethereum competitor, but it has experienced congestion issues, experts have questioned the project’s claims to be decentralised, and data by VC company Outlier Ventures projected a huge migration of engineers from the network in June 2020.

The token reached a high of $21.54 in April 2018, but is now trading at around $5.48.


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