Block.One’s Biggest Crypto Price Manipulation Fraud 2022 | Clifford Chance, PWC & DMG Investigate EOS ICO’s Ethereum Transfer to Bitfinex

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EOS, the newly coined cryptocurrency, soon became embroiled in controversy. EOS was initially based around the Ethereum blockchain, but soon became its own ecosystem known for its speed. It was the largest digital token sale ever. raised more than $4 billion by holding an ICO for a new cryptocurrency over 11 months. The company stated that it would use the money to develop tools that would accelerate the adoption of blockchain technology, which was backed by billionaires including Peter Thiel, Alan Howard, and Louis Bacon. However, instead of using the resources for the development of EOS and its community, used the money for its cryptocurrency exchange platform, Bullish.

EOS Price Manipulation Through Suspicious Accounts Leads to Inflation

New research published by Integra FEC, led by University of Texas at Austin McCombs School of Business finance professor John Griffin, raises fresh concerns about the EOS initial coin offering. Griffin, in interviews and a 14-page paper published on the Integra website Tuesday, points out a pattern of suspicious trades during the Initial Coin Offering. According to the paper, he alleges that the transactions, between potentially connected associates, “pumped up” the price of EOS and induced unwitting investors to buy the currency.

Griffin wrote that the seemingly artificial demand from the suspicious accounts had two effects. “It directly manipulated EOS’s offering price upward through the extra buying and inflated the market value of the token. Second, it created the false impression of value of the token, which enticed others to want to purchase the ICO token.”

Over the course of the ICO, Mr Griffin identified 21 accounts that engaged in regular, unusually large purchases of EOS, followed by sales to an exchange less than an hour later, a process he calls recycling. The recycled funds totaled 1.206 million Ether, the cryptocurrency used to trade EOS, or $814.6 million.

ljg2nk98 Refutes Griffin’s Report with Self Commissioned Reports From 2019

In a statement in response to the paper, pointed to a report issued in July by the law firm Clifford Chance LLP that said it “found no evidence of any arrangements between and third parties by which third parties bought tokens on’s behalf.” Clifford Chance, which completed the analysis with help from PwC and DMG Blockchain Solutions Inc., also said it found “no evidence that purchased tokens on the primary market.” ( had commissioned the study in 2019 amid allegations that surfaced as early as 2017 over whether purchased its own tokens during the sale.)

In a statement, said Griffin’s paper makes numerous errors in fact and logic in pursuit of a false thesis that can be easily disproven with publicly available information. did not elaborate on what those errors are.

Now that has shed more light on how it plans to use the revenue earned through its ICO, questions over the ICO are more relevant. announced in May that proceeds from the sale would be used to launch Bullish, a cryptocurrency exchange valued at $9 billion.

How It Worked

Griffin explains how the trading volley played out. To begin with, parties transferred large amounts of Ether, another cryptocurrency, to accounts created on an exchange. At’s crowdsale, account holders used Ether to buy newly minted EOS coins. But rather than hold onto EOS, as Instead of holding onto the EOS, as other EOS buyers did, the parties “quickly and repeatedly” sold the EOS to the same exchanges for Ether – usually within 40 minutes of purchasing it. more EOS.

According to Griffin, this behavior was unusual for several reasons:

  • During the ICO, most account holders sold EOS at a loss, rather than earning a profit by holding it.
  • In contrast to other accounts that participated in the sale, these accounts purchased and sold the same amount of Ether on a daily or weekly basis.
  • The Ether sent back from EOS’s crowdsale wallet to the Bitfinex exchange was delivered in an unusually complicated manner consistent with trying to obfuscate the identity and tracking of the funds, he said.

At Bloomberg’s request, Cornell Law School Professor Robert Hockett reviewed Griffin’s research. “This is what the SEC would call classic fraud and pump and dump. This is taking advantage of retail investors who don’t know what’s going on underneath and could be easily fooled.” The SEC and Department of Justice “should definitely be investigating,” he said.


Bitfinex Receives $1.72B Ether Through Wallet Withdrawals

Griffin’s findings align with an allegation made in the 2020 token holder lawsuit. Multiple withdrawals were made from what is known as a crowdsale wallet, where coin investors deposit their payments to Normally, these funds would remain in the wallet until the ICO is completed. Griffin discovered, however, that 2.895 million Ether ($1.72 billion) were withdrawn during the sale and sent to one exchange in particular, Bitfinex.

According to him, Bitfinex was the biggest destination of Ether funds, accounting for 39 per cent of all Ether raised. Griffin also raised concerns with the way the funds went to Bitfinex, saying they were done in a way that made them hard to track.

“These transactions took place over a series of four hops to overlapping Bitfinex deposit addresses, the design of which is consistent with obfuscating deposits to common accounts at Bitfinex,” he wrote.


EOS’ Decline Due to Controversy and Bad PR Post ICO

Crypto investor Aaron Brown, who writes for Bloomberg Opinion, said the technology is now outdated. “It’s not surprising to find it revitalizing when crypto came back, and also taking advantage of the boom in SPACs. But it has yet to demonstrate any technical successes.”

As prepares to launch Bullish, it may have trouble attracting crypto investors who believe they got burned in the ICO, said Katie Talati of Arca. According to’s March 19, 2019, email to shareholders, the company’s assets, including cash and investments, totaled $3 billion at the end of February. About $2.2 billion of those holdings are liquid fiat assets, such as U.S. government bonds.

“They are going to have bad PR associated with the project that’s going to follow them,” she added. “Crypto is very community driven – if you are going to burn your community, it’s hard to rebuild that.”


Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.