Decentralized exchange PancakeSwap is facing serious allegations of prize fraud following its recent trading competition. Blockchain analysis suggests that approximately half of the 1,700 winners may have been part of a coordinated effort to artificially inflate trading volumes, undermining the competition's 'random lucky draw' premise.
Key Takeaways
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Around 850 of the 1,700 winning wallets in PancakeSwap's trading competition appear to be interconnected.
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Evidence suggests these wallets were funded by other winning wallets, engaging in wash trading to meet competition thresholds.
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Sponsors have expressed concerns about fairness and transparency, with one stating the chance of such a coincidence is "close to zero."
Competition Details and Allegations
PancakeSwap's second trading competition, which ran from July 7 to August 5, aimed to reward participants who traded tokens from five Binance Alpha program sponsors: League of Traders (LOT), Bedrock DAO (BR), MilkyWay (MILK), NodeOps (NODE), and Moonveil (MORE). To qualify for the "random lucky draw," traders needed to meet specific trading volume thresholds on PancakeSwap.
However, blockchain records indicate a pattern where winning wallets received BNB (the native cryptocurrency of BNB Chain) from other winning wallets. This BNB was then used to conduct back-and-forth trades of sponsor tokens on PancakeSwap, a practice known as wash trading, to artificially boost volume. Once the threshold was met, the remaining BNB was transferred to another wallet that also ended up being a winner.
Sponsor Concerns
Representatives from League of Traders, one of the competition's sponsors, voiced strong suspicions. "The wallets were directly connected to each other, and they were getting picked. The chance of that happening consecutively is close to zero," a representative told Cointelegraph. They added that the prizes did not appear to be distributed fairly, suggesting winners were "hand-picked" rather than randomly selected.
Each of the five Binance Alpha projects contributed $50,000 to the total prize pool of $250,000, which was split into tiers of $2,000, $5,000, and $10,000. The maximum a single wallet could win was $2,500.
PancakeSwap's Response and Future Competitions
PancakeSwap has not yet responded to requests for comment regarding these allegations. Meanwhile, the exchange has already concluded its third trading competition, featuring six tokens and a $300,000 prize pool, again stating that 2,040 "random lucky winners" were rewarded. The platform has indicated that another trading competition is planned for the near future.
Sources
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