The Gotbit Hedge Fund company, which is the market maker (MM) of the WATER meme token, responded to analysts' concerns and admitted to a deliberate collapse of the asset's exchange rate.
On-chain analysts are worried about the \"team\" sales of $WATER tokens. However, most of these sales were conducted by Gotbit as part of MM operations. Why did we sell and what GHF is doing with $4M profits from these sales?
Read in the thread below pic.twitter.com/zI6QhWsroQ
During the launch of the coin on June 24 on DEX Raydium, its exchange rate jumped by 83%, but then collapsed by about 70%.
The hourly chart of the Raydium WATER/USD exchange. Data: DEX Screener."On-chain analysts are concerned about the sales of WATER tokens by the team. However, most of them were carried out by Gotbit as part of MM operations. Why did we sell and what will we do with a profit of $4 million from these sales?", the representatives of the company asked themselves.
According to them, "snipers are vampires who offend the community." They stated that the initial pump was caused by several independent traders who bought the token right at the launch using additional software.
Therefore, Gotbit decided to "take money from snipers, maintaining a course two to three times higher than the presale price."
"MM's task was to provide equal opportunities to all investors who bought the token on pre-sale. Maintaining the price of WATER with a market capitalization of $ 500 million would lead to queues for sale among the participants of the presale of investors who spent 180-200 SOL," the company explained.
The market maker also took this step to "protect the community from volatility", whose representatives could "mistakenly buy a token with an FDV of more than $ 1 billion," that is, before the sale of premarket traders. According to the team, such a situation would lead to losses of 90%.
Gotbit even attached a graph with marked sales and purchases of WATER to its post.
Gotbit's purchase/sales schedule. Data: X."In order to protect the community, we have reduced the price to a fair level," the firm stressed.
For operations, MM used funds allocated within the framework of the project's tokenomics for "liquidity and exchanges". They sold $4 million worth of tokens "at average quotes with a capitalization of $300 million."
After reaching the premarket price, Gotbit began to maintain the asset rate. In their opinion, the "weak hands" sold their tokens at breakeven without harming the community.
"There was no guidance on the proper creation of a large pre-sale project on the market, ensuring that all investors would be able to come out with claims. It didn't exist before. Gotbit developed it. The launch of WATER proved this. Follow us to learn more about marketmaking," the company's representatives summed up.
However, the community did not appreciate the manipulation by MM. Some users have called on the U.S. Securities and Exchange Commission (SEC) to pay attention to the incident.
Is @SECGov around? There is some fines to hit, money to be made and thrown these clowns in jail.
— Holy Bif (@holybif) June 27, 2024"Is there an SEC nearby? We need to issue several fines, earn money and put these clowns in jail," wrote a commenter under the nickname Holy Bif.
Others wondered how investors could be protected by merging their own tokens.
Recall that in May, the WSJ reported that Binance ignored the facts of market manipulation by market maker DWF Labs.
In April 2023, the company was already suspected of dumping tokens of its portfolio projects worth at least $65 million.