MATIC drops by 70% in 3 hours; Twitter speculates foul play

UPDATE: Since the publication of this article, Matic has published an official blog stating that they had already announced the release of 248 million tokens, which coincides with the net outward movement, making the aggregated outward movement around 2.7%. The post also expanded on how Samuel JJ Gosling later apologized for the miscalculation in his original tweet.

The Matic blockchain scalability platform came under a lot of scrutiny recently after its MATIC token fell by approximately 70.75% in just three hours. While no official announcement has been made by the Matic Network team, many users on Twitter speculate foul play.

Source: TradingView

Soon, Sandeep Nailwal, Co-founder and Chief of Operations at Matic, took to Twitter to dispel some of the FUD. He tweeted, “It will be clear very shortly that we are not behind this,” adding that they would, “post a detailed analysis and come out stronger than ever from this evident manipulation.”

On digging through the transactions made by The Matic Network Foundation, Samuel JJ Gosling, Founder of Validity, a self-governing cryptocurrency evaluation platform, found that it had transferred nearly 1.5 billion MATIC (worth nearly $70 million at ATH levels) over the last fifty days, all of which were found to have been sent for liquidation to the Binance cryptocurrency exchange.

It seems, however, that the quoted number of 1.5 billion tokens might be incorrect. Data on ViewBase showed that the transferred amount was closer to $218 million over the last 30 days, while a builder at EthHub stated that, “in the past 50 days, they have moved ~290,000,000 MATIC to Binance NOT 1,495,322,715.”

Nailwal responded further by maintaining that exact numbers would be posted and that “the out amount was from the smart contract lockup account to Foundation account.” He also added that the amounts sent to Binance, or any other accounts, had been in conjunction with their token release. Nailwal said,

“Why would a project do this deliberately?”

Indeed, this is the question on the community’s mind. Binance CEO Changpeng Zhao also joined the conversation, stating that while the exchange is still investigating the data, it is already clear to Binance that the Matic team had nothing to do with the token’s sudden drop in value. Binance subsequently suspended repayment for MATIC and a few other coins on their margin trading platform.

While CT is ablaze with accusations, CZ’s statement seems to have calmed users down on the Matic Network telegram group. With Nailwal calling this a “coordinated attempt to malign [their] reputation,” perhaps further analysis will reveal what actually happened over those three hours.