Sky Mavis chief denies insider trading allegations amid Ronin sidechain hack

The head of Sky Mavis, Trung Nguyen, said that any speculation about the Axie Infinity team’s involvement in an insider-trading scheme in the period immediately after the Ronin sidechain hack was “baseless and false”.

This story includes speculation of insider trading. These accusations are baseless and false. In fact, the Founding Team even deposited $7.5M from a known Axie multi-sig wallet TO Ronin Network prior to the bridge closing to avoid triggering any short-sellers watching.

— Trung Nguyen (@trungfinity) July 28, 2022

Earlier, a blogger under the nickname Asobs published a video accusing Nguyen and other founders of insider trading of AXS tokens.

\n

According to Asobs, 22 hours before the public disclosure of the Ronin hack, the wallet belonging to Nguyen transferred 48,838 AXS (more than $3.2 million at the rate at the time) to the cryptocurrency exchange Binance.

He noted that other addresses identified by him as belonging to Sky Mavis employees also conducted large transactions during this period.

13/19
Here we have a 5 day period where AXS ran up, but before the hack was discovered. Then roughly 22 hours between SM learning about the hack and shutting down the network. pic.twitter.com/MBEnitasCs

— Asobs (@Asobs_CNG) July 28, 2022

«Here we see a five-day period during which AXS rose, and the hack had not yet been discovered. Then—approximately a 22-hour window between Sky Mavis learning about the hack and shutting down the network. […] When we look at the amounts moved, there is a significant difference between the value moved in these two periods», wrote Asobs.

The blogger explained that he found seven wallets linked to Sky Mavis employees. In the specified five-day period, they collectively moved assets worth $150,000. However, after the company learned of the hack, the same wallets conducted transactions totaling $1.15 million.

In a conversation with Bloomberg, a company representative Kali Mur confirmed that the address that transferred 48,838 AXS indeed controls Nguyen. She explained that the CEO wanted to bolster the company’s liquidity amid the looming crisis and was forced to execute the transaction “not obvious to the market” way.

«We understood that our position would depend on the amount of AXS on Binance. Greater liquidity would give us the ability to use various options for securing loans/capital. The founding team decided to transfer the assets from his wallet so as not to allow traders who monitor Axie’s official addresses to outpace the market,” Mur said.

In a tweet, Nguyen confirmed that the transfer of $3 million in AXS to Binance was “part of the liquidity provisioning plan”. He said that before the Ronin Bridge’s closure the team also sent to the exchange assets worth $7.5 million “from a known multi-sig wallet”.

As reported, on March 29, 2022, Sky Mavis announced the Ronin sidechain hack. The developers said that on March 23, the attackers, exploiting a vulnerability, withdrew crypto assets totaling $625 million. The network was halted.

As a result, of a phishing attack on one of the company’s employees, the hackers were able to gain access to its infrastructure and the Ethereum-sidechain validators.

Later, the developers noted that the attackers used social engineering. The attack was carried out in December 2021.

The Ronin restart took place in June — three months after the hack.

Follow ForkLog’s Bitcoin news on our Telegram — cryptocurrency news, prices and analysis.