LUCKNOW (CoinChapter.com) — Tellor (TRB) price experienced an extremely volatile day of trading on Dec. 31, 2023. The altcoin first surged nearly 150% to an all-time high of $619 before crashing down to $136 within 13 hours.
This massive pump and dump has sparked allegations of manipulation and insider trading. Just as the price spiked to its peak, Etherscan data showed a transaction of 4,211 Tellor (TRB) tokens worth approximately $2.4 million being moved from the Tellor team to a Coinbase wallet. The timing of this large transfer to an exchange has raised suspicions.
$68M Wiped Out as Tellor (TLB) Price Plummets
The rapid plunge in Tellor (TLB) price triggered over $68 million worth of liquidations across leveraged positions, according to data analytics platform CoinGlass. Blockchain analytics service Lookonchain spotlighted CoinGlass’s liquidation figure in a January 1st tweet, further drawing attention to the fallout from Tellor’s price rollercoaster.
Whale Wallets Accused of Orchestrating Altcoin Tellor’s Parabolic Surge
However, blockchain analytics firm Spot on Chain offered an alternative explanation for the extreme Tellor (TRB) price volatility. They reported that twently “whale” wallets controls 26% of altcoin Tellor’s circulating token supply.
This small group of major holders began accumulating Tellor’s TRB at prices around $15. Then, they moved their holdings to centralized exchanges as the price rose. Their timed deposits onto trading platforms appear to have artificially boosted prices at certain points. This allowed these whales to sell into the gains.
Analysis ‘Spot on Chain’ believes the actions of these influential whale wallets played a major role in pump-and-dump of Tellor’s price.
Synthetix Stakers Lost $2M
The huge volatility also wreaked havoc on several decentralized trading protocols such as Synthetix (SNX) and Hyperliquid. Synthetix uses an automated system of risk parameters to hedge positions, but this system failed to account for the alleged manipulation driving TRB’s abnormal price swings.
Due to this failure, Synthetix stakers incurred nearly $2 million in losses.
The platform had a relatively low $250,000 open interest cap on Tellor’s TRB that was never adjusted despite increasing trading volumes. This allowed traders to take on overleveraged bets of up to $12.5 million.
Synthetix founder Kain Warwick admitted the platform’s risk controls were too lax in this incident, stating:
“This should have been adjusted back down, but risk controls were lax, there was diffusion of responsibility. The Spartan Council is responsible for params though.”
he wrote.
In the aftermath, Kain Warwick stressed that robust risk management protocols must be deeply ingrained into the core code of decentralized trading venues like Synthetix. Unlike traditional exchanges, decentralized platforms do not have access to customary legal and court dispute systems.
“Either you build a robust decentralised trading venue and live by your risk controls or you are just larping as a DEX. I look at these kinds of incidents as the cost of being a dex,” said Warwick.
The Tellor team has not responded to requests for comment regarding the suspicious trading activity, transactions, and alleged manipulation. However, the episode has increased scrutiny of the Tellor oracle network and its native token TRB.
