• EOS is under fire for allegations that its ICO was a shady “pump scheme.”

  • EOS raised a record $4.2 billion during a year-long initial coin offering (ICO) that ended in 2018, making it the largest ICO in history. Expectations were high when combined with its Delegated Proof-of-Stake (DPoS) consensus mechanism, which has throughput thousands of times greater than Ethereum’s.

    However, these expectations have yet to be met. A look at EOS’s stagnant dapp development and slide in the CoinMarketCap rankings reveals a project that has gone dormant.

    Dan Larimer, the CTO of the development firm behind EOS, resigned in December 2020, adding to the project’s uncertain future.

    However, new research from the forensic financial analysis firm Integra FEC calls the project’s viability into question.

    What became of EOS?

    There are numerous reasons for EOS’s demise. For starters, there have been claims that the structure of EOS is more akin to a distributed database than a cryptographic protocol. This means that the network is not as decentralized as claimed.

    “The EOS network is not necessarily a blockchain-based cryptocurrency network, but rather a homogeneous distributed database network that allows different user accounts to communicate and interact via the distributed network database.”

    Then, in late 2019, EOS experienced congestion issues, which resulted in slow transaction times and high fees. As a result, some claimed it was unfit for purpose.

    Around the same time, the SEC announced a $24 million settlement with EOS on charges that it had conducted an unregistered ICO.

    In short, EOS had been through hell since its record-breaking ICO three years ago.

    This is reflected in the project’s price performance, indicating a lack of interest. EOS reached an all-time high of $22.71 in April 2018. While there have been brief bouts of bullish price action hinting at the possibility of re-reaching this level, they have all since peaked.

    Cardano and Solana, for example, continue to set new all-time highs. However, EOS is struggling to reclaim its former glory.

    What exactly are Integra FEC’s claims?

    Integra FEC research, led by John Griffin of the University of Texas, points to suspicious trades during EOS’s ICO. It is alleged that these transactions were wash trades between associates in order to inflate the price and entice unsuspecting investors.

    “The transactions between potentially connected associates “inflated” the price of EOS and induced unwitting investors to purchase the currency.”

    Griffin went on to say that it was a manipulation of the EOS offering price. As a result of the suspicious transactions, the token’s market value has risen. As a result, others were persuaded to join in.

    There are 21 accounts that have been identified as being involved in Griffin’s described practice. He estimates that the “recycled funds” total $815 million. However, given the possibility of other price manipulation methods being used, the actual sums involved could be significantly higher.

    Griffin makes no claims about who owns these accounts, nor does he claim Block.one was involved.

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