Sky Mavis Chief Denies Insider Trading Allegations Amid Ronin Sidechain Hack

Trung Nguyen, CEO of Sky Mavis, called any speculation that the Axie Infinity team was involved in an insider trading scheme immediately after the Ronin sidechain hack “baseless and false.”

Earlier, a blogger under the nickname Asobs published a video in which he accused Nguyen and other founders of the company of insider trading in AXS tokens. 

According to Asobs, 22 hours before the public announcement of the Ronin hack, Nguyen’s wallet transferred 48,838 AXS (more than $3.2 million at the exchange rate at the time) to the Binance cryptocurrency exchange. 

He noted that other addresses he identified as belonging to Sky Mavis employees also made large transactions during this period. 

“Here we see a five-day period during which AXS has been rising and the hack has not yet been discovered. Then there was a roughly 22-hour window between Sky Mavis becoming aware of the hack and shutting down the network. […] When we look at the amounts transferred, there is a significant difference between the value transferred in these two periods,” wrote Asobs.

The blogger explained that he found seven wallets associated with Sky Mavis employees. In that five-day period, they collectively moved $150,000 worth of assets. However, after the company became aware of the hack, these same wallets made transactions worth $1.15 million. 

Speaking to Bloomberg , a spokeswoman for the company, Cali Moore, confirmed that Nguyen does indeed control the address that transferred 48,838 AXS. She explained that the CEO wanted to bolster the company’s liquidity amid the impending crisis and was forced to execute the transaction “in a way that is not obvious to the market.”

“We understood that our position would depend on the amount of AXS on Binance. Greater liquidity would enable us to use various loan/capital collateral options. The founding team decided to transfer assets from his wallet to prevent traders who track official Axie addresses from getting ahead of the market,” Moore said.

On Twitter, Nguyen confirmed that the transfer of $3 million in AXS to Binance was “part of the liquidity plan.” He said that before the Ronin Bridge closed, the project team also sent assets worth $7.5 million to the exchange “from a well-known multisig wallet.” 

Recall that on March 29, 2022, Sky Mavis announced the hacking of the Ronin sidechain. The developers said that on March 23, attackers, using a vulnerability, withdrew from crypto assets worth $625 million. The network has been stopped. 

As a result of a phishing attack on one of the company’s employees, hackers managed to gain access to its infrastructure and Ethereum sidechain validators.

The developers later noted that the attackers used social engineering. The attack was carried out in December 2021.