The Curious Case of Suspicious $ARKM Transfers

Crypto analytics company Arkham is currently attracting much scrutiny from the crypto community after crypto sleuth EmberCN and rival company Nansen started calling attention to recent transactions involving $ARKM tokens.

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On April 3, EmberCN noted that 25M $ARKM (about $62.5M) was unlocked and transferred from Arkham's Ecosystem Fund and Treasury. Among them, 6M $ARKM ($15M) have been transferred to a major exchange.

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Meanwhile, according to Nansen's tweet thread on April 5, about 25.2M $ARKM, worth about $56M, had shifted around to multiple wallets that were left unlabeled on Arkham's wallet tracking platform.

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To uncover the bigger picture beyond the initial allegations mounted against Arkham, the 0xScope team conducted a deeper investigation and analysis into recent $ARKM transactions.

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Prologue: $ARKM on Coinbase + Bullish Whale Moves

On April 2, $ARKM was listed on Coinbase. At the time, $ARKM was being perceived positively as a digital asset, due to the following factors:

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1. CEX withdrawals and deposits of $ARKM around the time of the Coinbase listing showed a bigger proportion of withdrawals, a likely bullish signal for traders.

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2. Key market makers have increased their $ARKM holdings. For instance, GSR increased its $ARKM holdings from 3.15M to 13.59M tokens. Meanwhile, a GSR address for processing CEX deposits held 321K $ARKM, up from 79K.

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3. Another major crypto institution, Wintermute, grew its $ARKM holdings from 469K to 2.02M tokens.

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4. Open interest for $ARKM trading on major crypto exchanges went up by 14% on April 1, a day before the Coinbase listing.

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However, since its Coinbase listing, Arkham made $ARKM transfers that were intriguing, to say the least.

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Suspicious $ARKM Transfers and Their Implications

When Arkham debuted its tokenomics for $ARKM, it allocated 40.5% of its 1B total token supply to investors, core contributors, and advisors. These tokens are meant to be locked for 1 year after listing, during which they are scheduled to unlock linearly over 3 years. $ARKM started getting listed on exchanges on July 18, 2023, so the first unlock is supposed to happen this July.

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However, with about three months to go before the $ARKM listing anniversary, Arkham breached the terms of its tokenomics. The 0xScope team outlined the actual flow of $ARKM tokens as of April 8:

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Based on our research, only 355M $ARKM was found in vesting contracts, well below the 40.5% allocation planned.

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Here's a breakdown of the recent $ARKM transfers, based on investigations conducted independently by 0xScope and other investigators:

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1. On April 2, Arkham Treasury sent 20M $ARKM ($52M) to address 0x1411, which transferred 5M $ARKM to 0x0d25. This address then deposited 1M ARKM to Wintermute's deposit address on a major exchange. 0x0d25 still holds 4M $ARKM, possibly for future dumping transactions. For more details, you can check this token flow on Scopescan.

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2. On the same day, Arkham Treasury unlocked 200K $ARKM and sent it to address 0x9eac. This address has not yet moved its $ARKM funds.

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3. At around the same time, the Arkham Ecosystem Fund unlocked and transferred 5M $ARKM, all of which entered a major exchange through the market maker GSR using several addresses, as seen on this token flow chart. One of the addresses, 0xe5d6, was notably used by GSR to deposit their Xai ($XAI) tokens through the Arbitrum chain.

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Given the recent major $ARKM transfers, we recommend looking into addresses with plenty of $ARKM tokens, especially those that Arkham still seems to control, to get ahead of potential sell-offs triggered by these whale addresses. For instance, on July 18, 2023, when $ARKM started getting listed on major exchanges, Arkham transferred 30M of its tokens to Gnosis Safe address 0x0850. Based on transactions made by the owner of this Gnosis Safe, we conclude that this safe is owned by Arkham. As of today, the 30M $ARKM stored at this address has not been transferred out yet.

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(Quick crypto analysis guide: Discovering abnormal token movements like $ARKM's recent transfers can be done through Scopescan. Go to the Scopescan Token Explorer, search for your token of interest (in this case $ARKM), and you can see a dashboard that breaks down recent transactions, exchange deposits and withdrawals, and other relevant stats. This is a snapshot of Scopescan's $ARKM exchange analysis shortly after the major $ARKM transfers. Notice the change in the Withdrawal vs Deposit metrics for this screenshot and compare it to the snapshot from earlier in this article. Sign up for Scopescan here.)

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The Bigger Picture: Tokenomics Changes, Etc.

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Now that we have a more comprehensive picture of the $ARKM transactions, going beyond recent transactions and digging into relevant historical deals, we can infer some potential headwinds and consequences that $ARKM traders should take note of. The 0xScope team analyzed the potential risks regarding $ARKM after its recent token transfers.

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1. Breaking investor trust

The first consequence of the $ARKM token transfers is the existence of solid proof that Arkham did not follow the token allocations that it arranged during its token debut. Here's a quick comparison of Arkham's initial tokenomics and the actual distribution revealed through its recent transactions.

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With its recent actions, Arkham ended up breaking the trust of most of its investors. It remains to be seen whether the project intends to address these changes to its community or continue the no-comment policy that it has seemed to go for these past few days.

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2. Bearish consequences for trading $ARKM

People who bought $ARKM for various reasons now have to deal with the reality that the project's tokenomics schedule will not be followed, resulting in an increased risk of token dumping in the market. This uncertainty regarding token allocation will likely provide headwinds for $ARKM trades moving forward, unless the company rectifies the situation proactively.

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3. A call for community vigilance

Ultimately, recent developments in Arkham should matter most to the community it has built. Web3's novel approach to company organization gives token holders a say on what's happening to the projects they are invested in. This is where Web3 analytics tools like Scopescan and Scopechat can help crypto investors stay vigilant about their crypto investments by investigating irregular moves and being aware of the latest whale moves on the tokens in their portfolio, among many other benefits.

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Where does $ARKM go from here? This is where AI-powered crypto analysis can help you. Here's a token report from Scopechat about $ARKM, complete with bullish and bearish indicators.

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To get more insights and forecasts on many of your favorite tokens, including timely alerts and notifications on major moves, subscribe to Scopechat Pro today.