It’s safe to say that the poster child of the blockchain and crypto uprising of 2021 Axie Infinity has had a rough ride of late.
After creating a gaming ecosystem that allowed tens of thousands of gamers around the world to play Axie Infinity as a full time job and seemingly make millions collectively for owners of rare and powerful Axies, the game has tumbled in value and popularity through 2022 as its ever ascending bubble – based on a continuous influx of new players willing to pay increasing amounts for the Axies required to play the game – burst.
Hack and slash
The final pin to Axie’s soft bloated underbelly being a hack on the Ronin sidechain that the game used in order to speed through transactions and keep players happy. On March 23rd 2022 a theft of Ethereum and USDC stablecoins from the game’s servers – estimated to be in the value of $600 million – was announced by owners Sky Mavis, prompting a wake up call for anyone with considerable sums loitering within the game.
However, in the interests of security, withdrawals from the game were blocked leaving many players upset as their cash was effectively trapped in the game. Needless to say as soon as the shutters opened for business funds were quickly withdrawn and the influx of get-rich-quick gamers lining up to play dried up.
Now, in what can only be described as ‘not a great look’ for the blockchain and crypto gaming space as a whole, it’s emerged that Trung Nguyen, the CEO and co-founder of Axie Infinity maker Sky Mavis, transferred $3 million worth of AXS from the game and tucked it safely into Binance after the theft, but before their announcement.
The dubious move has been discovered by popular YouTube crypto specialist Asobs, who, after being tipped off about the movement of 48,838 AXS, went in deep on the translation to find out who exactly was doing what.
It turns out that not only did the CEO move AXS from the game but so did a large number of employees who are regularly gifted the token as part of a company-wide bonus program.
The official response
Digging deeper Bloomberg were able to elicit an official response from Kalie Moore, a Sky Mavis spokeswoman who told them that Nguyen was only acting in the community’s best interests to ensure that the token had enough real cash liquidity to ride out the upcoming storm.
“At the time, [Sky Mavis] understood that our position and options would be better the more AXS we had on Binance. This would give us the flexibility to pursue different options for securing the loans/capital required. The Founding Team chose to transfer it from this wallet to ensure that short-sellers, who track official Axie wallets, would not be able to front-run the news.”
Soon after Nguyen himself took up the baton on social media: “This story includes speculation of insider trading,” he wrote. “These accusations are baseless and false. In fact, the Founding Team even deposited $7.5M from a known Axie multi-sig wallet TO Ronin Network prior to the bridge closing to avoid triggering any short-sellers watching. My life’s work is Axie Infinity and the community we’ve created together.”
As many of you know, I prefer to operate behind the scenes, but there is a story that dropped today that I want to address with the community, personally.
— Trung Nguyen (@trungfinity) July 28, 2022
Still, it’s not all bad news. “I take ownership of the security breach, and will use it as a learning experience,” Nguyen offered. And that “The Bridge has been re-opened with all player funds backed 1:1. Many in the media have conveniently ignored this, as it doesn’t fit their predetermined narratives.”
While Sky Mavis did indeed raise over $150m in funding to ensure that players would have their AXS tokens refunded “1:1” it ignores the fact that before the hack their AXS was worth $64 and is now – at the time of writing – worth $17.
The hack has been attributed to the North Korean-based Lazarus Group with the eventual destination, and end use of the funds as yet unknown.