Major cryptocurrency exchanges Binance and Bitget have initiated investigations into the recent trading activity surrounding RaveDAO's RAVE token, following allegations by on-chain analyst ZachXBT that insiders orchestrated a large short squeeze, resulting in the token's rapid price increase. Bitget's CEO, Gracy Chen, confirmed the exchange had begun investigating the matter, while Binance CEO Richard Teng stated that the platform would examine signs of market misconduct.

Another exchange, Gate, was also implicated in ZachXBT's investigation. A $10,000 bounty has been offered to whistleblowers who can provide evidence about the parties involved. The RAVE token experienced a 4,500% rally over the course of a week, resulting in over $44 million in bearish positions being liquidated in a single day. However, the short squeeze highlighted the concentration of RAVE tokens within a small set of wallets, with nearly 90% of its supply held in just three Gnosis Safe wallets at the time.

Investigators also noted that millions of tokens were transferred to exchanges shortly before the rally began. RaveDAO, a Web3 project focused on electronic music events, has hosted events across several regions and reported $3 million in revenue in 2025. The project's token, however, has exhibited market behavior that contrasts with its relatively small footprint, surging from $0.30 to over $6 in a single day before receding. At its peak, the token's market value briefly exceeded $6 billion, placing it among the largest cryptocurrencies by market cap.

A separate claim suggests a 'bait and liquidate' pattern, where visible transfers suggest selling pressure, drawing traders into short positions, only to have those tokens later withdrawn while prices rise, forcing short sellers to buy back at higher prices. Community reports have linked the project to figures associated with earlier crypto ventures, although these connections have not been independently verified.

RaveDAO has addressed the situation, stating that the team is not responsible for the recent price action and plans to liquidate portions of unlocked tokens 'when appropriate.' The project is exploring models that tie team incentives to ecosystem growth but has not committed to a specific mechanism or timeline.