Plasma Founder Denies Insider Selling After XPL Token Drop

Background on Plasma and XPL Token Launch

Plasma, a new layer-1 blockchain focused on making stablecoin payments more efficient, launched its mainnet beta and native token, XPL, on September 25. The debut saw the XPL token spike to nearly $1.70 on Sunday, before declining sharply to $0.83 by Wednesday, marking a loss of over 50% in value, according to TradingView data.

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The rapid decline in XPL’s price led to speculation within the cryptocurrency community that insider selling might be to blame. In response, Paul Faecks, founder of Plasma, publicly denied any team involvement in dumping tokens. He emphasized, “No team members have sold any XPL,” adding that investor and team token allocations are locked for three years with a one-year cliff, ensuring no early sales can occur (Cointelegraph).

Community Investigates XPL Token Movements

Suspicions intensified when onchain analyst ManaMoon reported large transactions from the Plasma team vault, indicating that over 600 million XPL tokens were sent to exchanges before the official launch. ManaMoon stated, “Personally, I believe that someone was TWAP selling an excessive amount of tokens that retail buyers could not withstand,” suggesting use of the time-weighted average price (TWAP) selling strategy, which breaks large orders into smaller chunks for gradual execution.

Other community members, such as crypto_popseye, pointed fingers at both the Plasma team and the trading firm Wintermute, blaming them for market instability. However, Faecks dismissed these claims, saying, “We have not engaged Wintermute as a market maker and have never contracted with Wintermute for any of their services,” and confirming the team’s information about Wintermute’s XPL holdings is based solely on what is publicly available.

Despite these reassurances, skepticism persisted. Community members questioned whether the founder’s statements about locked team tokens also applied to other allocation categories, like “ecosystem and growth” tokens. One commenter suggested Faecks’ messaging was ambiguous, stating, “Pretty clear they have been sold, but you are wording your tweet to make it seem like they haven’t been sold.”

Market Reaction and What’s Next for Plasma

The price decline and rumors have increased scrutiny of Plasma’s tokenomics and market operations. Faecks reiterated that the project remains “laser-focused on building the future of money” and declined to make further comments. As of publication, Cointelegraph reports that the Plasma team has not provided additional information regarding the matter.

The situation underscores ongoing challenges around transparency in early-stage blockchain projects, especially during volatile token launches. Both investors and project teams must navigate concerns about insider activity and market manipulation.

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