Sky Mavis, the company that made the widely criticized “play-to-earn” NFT game Axie Infinity, is now defending itself against claims that executives moved money out of the main game while the attack was going on, before the company even told customers they had been scammed.
Bloomberg said on Thursday that Mavis CEO Trung Nguyen may have sent $US3 ($AU4.27) million worth of Axie’s main token, AXS, from the Axie network to the cryptocurrency exchange Binance. This seems to have happened when the blockchain was being hacked a lot and before it said that users couldn’t take out their own tokens either.
On March 23, hackers broke into Axie Infinity’s sidechain Ronin Network and stole about $US600 million ($AU853 million) in ether and USDC stablecoin over almost a week before the Ronin Bridge was shut down. It was the biggest crypto heist ever, and there have been a lot of them. The FBI found that the crime was done by a group called the Lazarus Group, which had ties to North Korea. The Block says that the attack could be linked to fake job postings on LinkedIn in July.
In a series of tweets that came out soon after Bloomberg’s report, Nguyen basically admitted that he was behind the transaction. He said he did it to “create liquidity” for when Ronin users would finally be able to take their assets off the blockchain. His thread does talk about the other senior Axie executives, who seem to have given Nguyen more than $750,000 in AXS, which he then moved to the Binance exchange. The creator said that this was done to stop short-sellers. He even said that the founders sent $US7.5 million (AU$10.67 million) from a common wallet to Ronin Network “so as not to alert any short-sellers who were watching.”
Aside from Bloomberg’s study, a second video from the crypto news YouTube channel Asobs showed how Nguyen’s wallet name and money transfer were found by comparing his Twitter handle and his name on the crypto transfer. Asobs agreed with Nguyen that adding liquidity would help people withdraw their crypto after such a big hack, but he questioned the company’s initial claims that only the founders knew about the hack, since Binance also seemed to know, and why other wallets were also withdrawing their crypto.
Nguyen said that the accusations of insider trading are “unfounded and wrong,” and that the founding team gave $US7.5 million ($AU10.67 million) to Ronin before the bridge closed. The person who made it also said that the bridge had been fixed and that users who had lost bitcoin had been given them back. But CoinMarketCap says that AXS was worth $US64 (AU$91) before the attack and is now worth more like $US18 (AU$25).
Even so, there is still a cloud over the whole thing, especially since some employees are said to have sold their tokens during the incident. In a series of tweets sent out at the end of June, Sky Mavis said that before the company found out about the hack, workers were selling their tokens because the price of tokens had gone up by about 49%. According to the company, no one at Sky Mavis or Axie knew about the hack before it was made public, and the founders “worked closely with Binance operations and provided liquidity for Ronin.”
There’s not much to say about a game that promised players they could play and make money at the same time. During the epidemic, the game got a good spin by saying it would give jobs to people who had lost their jobs in places like the Philippines. In a recent article in Time, gamers said that the game had almost ruined their lives because it promised them they would make much more money than they would at a normal job. When more people joined, however, the model slowly fell apart, leaving low-level workers in need of money and forcing them to work for hours on end.
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