29 Apr

In a stunning demonstration of cryptocurrency trading, a trader from the Solana ecosystem had an initial $49,000 investment grow to almost $2 million in just five hours. The transaction involving the recently introduced meme coin Tori the Cat (TORI) raised serious suspicions around possible insider trading.

The trader used 344 SOL, the native token of Solana, which had been moved from Binance to two different wallet addresses over the course of several days, to buy 261.4 million TORI. The magnitude and velocity of the profit realized—roughly 4000%—drew the interest of both observers and experts.

A blockchain analytics platform called Lookonchain observed that the trader dispersed the TORI tokens among several addresses soon after obtaining them. Allegations of insider trading were sparked by the tokens' swift dissemination and sharp increase in value. X (previously Twitter) and other social media observers noted that these addresses' similar actions probably point to a single organization controlling them.

Even with the tantalizing $2 million paper value, the trader will have a difficult time turning these unrealized gains into real money. The main challenge is related to the TORI token's liquidity, or lack thereof.

Raydium, a decentralized exchange on the Solana platform where the tokens were bought, does not fully recognize TORI. The exchange only recognizes tokens by their mint address and only has a small amount of liquidity (6,466.24 SOL and 93.65 million TORI) available for exchanges. Due to this backlog, it is currently not just difficult but also impossible to liquidate the full $2 million without having a major negative influence on the token's price, possibly wiping out any gains.

The extremely high degree of risk involved with dealing meme coins and other low-liquidity tokens is starkly brought home by this incident. In contrast to more well-known cryptocurrencies like Bitcoin and Ethereum, these assets are subject to high volatility and can have liquidity problems that make it more difficult to realize profits. Traders must be extremely cautious and possess a deep understanding of market mechanics before engaging in such massively speculative investments.

April 2024, Cryptoniteuae

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