Following allegations of a potentially orchestrated price surge, major cryptocurrency exchanges Binance and Bitget have initiated investigations into the trading activity surrounding RaveDAO's RAVE token. The claims, brought forth by on-chain analyst ZachXBT, suggest that insiders may have engineered a large short squeeze, resulting in the token's rapid appreciation.
In response to the allegations, Bitget's CEO, Gracy Chen, confirmed that the exchange has started investigating the matter, while Binance's CEO, Richard Teng, stated that the platform is also examining the claims and will take necessary actions to address any signs of market misconduct. Another exchange, Gate, was also implicated in ZachXBT's investigation. To encourage whistleblowers to come forward, ZachXBT has offered a $10,000 bounty for private information regarding the parties involved. The RAVE token's price surge led to the liquidation of over $44 million in short positions, with the token's value increasing by 4,500% over the course of a week.
However, the rally also highlighted the concentration of RAVE tokens, with nearly 90% of the supply held in just three Gnosis Safe wallets. Furthermore, investigators noted that millions of tokens were transferred to exchanges shortly before the price surge.
RaveDAO, a Web3 project focused on electronic music events, has reported $3 million in revenue and hosted events across several regions. The project's token, however, has exhibited significant market volatility, trading below $0.50 for most of its history before surging to over $6 in a single day.
At its peak, the token's market value briefly exceeded $6 billion, only to drop by over 50% since then. Some have alleged a 'bait and liquidate' pattern, where visible transfers are used to create the illusion of selling pressure, drawing traders into short positions.
If those tokens are later withdrawn while prices rise, short sellers may be forced to buy back at higher prices, driving further gains for those on the other side of the trade. While these claims remain unproven, the concentration of supply suggests that such a scenario is possible. 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.