Global virtual asset exchanges Binance Holdings Ltd. and Bitget have launched investigations into suspected insider involvement related to the surge in the price of the RAVE token. As RAVE's price soared 10,000% in about two weeks, suspicions of insider involvement spread among experts.
According to CoinMarketCap, a virtual asset market tracking site, on the 20th, the price of RAVE, which was $0.25 at the start of the month, jumped to $25 on the 18th. The increase is close to 10,000%.
During this period, the market capitalization hit more than $18 billion at its peak. Its market cap ranking quickly climbed to 16th, overtaking major names in the existing altcoin (Alternative Coin, all virtual assets excluding Bitcoin) market such as Litecoin (LTC), Avalanche (AVAX) and Sui (SUI).
As allegations emerged that insiders were involved in the backdrop of RAVE's price spike, Binance Holdings Ltd. and Bitget said they were launching investigations into transaction activity. Bitget Chief Executive Officer (CEO) Gracy Chen said, "We started an immediate investigation," and Binance Holdings Ltd. CEO Richard Teng said, "We will always investigate unfair market conduct."
The reason for the insider manipulation allegations is the indication that a large volume moved from a RAVE developer wallet to Binance Holdings Ltd., Bitget and others just before the price spike. There was also a claim that 98% of the total supply at the time was moved by insiders related to RAVE.
In particular, as RAVE's price surged last week, liquidations totaling more than $44 million occurred in a single day. Most of the liquidated positions were short positions that had bet on a decline.
Experts raised allegations that RAVE insiders carried out a "short squeeze." A short squeeze refers to a phenomenon in which the price rises even more sharply as short-position investors, who had bet on a price drop, buy back the asset to limit losses as the price rises.
The claim is that RAVE insiders made it appear that selling pressure was strong just before the surge to induce investors to take short positions, then executed a short squeeze. Large transfers to exchanges are typically interpreted as a signal for selling and a decline. The explanation is that insiders used this to induce investors' short positions and artificially drove up the price of RAVE, where supply was limited.
Launched in Nov. 2023, RAVE is a virtual asset that promotes the convergence of electronic dance music (EDM) events and Web3 infrastructure. Virtually unknown until last month, the project drew market attention as it posted daily gains from mid-month.