Plasma Founder Refutes Insider Selling Allegations After XPL Token Plunges 50%
Plasma’s layer-1 blockchain debut has been marred by controversy as its native token, XPL, plummeted over 50% following a meteoric rise after launch. Founder Paul Faecks has firmly denied any insider selling or team-driven dumping, insisting that both team and investor tokens remain securely locked under a three-year vesting schedule with a one-year cliff.
XPL Price Volatility Fuels Market Suspicion
Launched on September 25, Plasma’s XPL token soared to an all-time high of nearly $1.70 before tumbling to lows around $0.83 within days a swift drop that triggered widespread rumors of foul play among traders and token holders. Many in the crypto community took to social media and blockchain explorers, suspecting that massive selling via time-weighted average price (TWAP) strategies was overwhelming retail demand.
On-chain investigations highlighted significant movements from the Plasma team vault, with at least 600 million XPL tokens reportedly transferred to exchanges ahead of the token’s collapse. This spurred allegations that tokens intended for ecosystem development or growth were spun into early sell pressure, but not explicitly by the Plasma core team.
Founder’s Response: No Insider or Team Sales
Paul Faecks directly addressed the allegations on X, stating:
“No team members have sold any XPL. All team and investor allocations are locked for three years, with a one-year cliff. Only public sale and liquidity allocations are live.”
The Plasma team insisted it has not engaged high-frequency market makers like Wintermute, nor has it contracted with them for any services. Faecks reiterated,
“We have the same information as the public on Wintermute’s ownership of XPL. We have not engaged Wintermute as a market maker.”
Community Still Probing Ecosystem Token Distributions
Skeptics and concerned token holders continued questioning whether other allocations such as those set aside for ecosystem and growth funds were sold during the price drop. They accused the team of carefully-worded statements meant to assure the market while leaving ambiguity around these specific token buckets. The Plasma team declined further comment, choosing to focus on development and ecosystem partnerships.
Strong Fundamentals But Ongoing FUD
Despite the price volatility, Plasma’s fundamentals remain robust:
- The mainnet attracted $2 billion in total value locked within days.
- Backing from major industry players, including Tether and Bitfinex, and a successful $373 million public token sale.
- Over 100 DeFi app integrations on mainnet beta, emphasizing its focus on cheap, fast stablecoin transfers.
Yet, the abrupt price action and large early sales by profit-takers many among the top-earning wallets have intensified suspicion and “fear, uncertainty, and doubt” (FUD), drawing attention to the importance of transparency for new blockchain token launches.
What’s Next for Plasma and XPL?
While some analysts view the crash as a healthy correction after early hype, others point to the launch structure and rapid sell-offs as warning signs for future price stability. With XPL trading roughly 40–50% below its peak, the onus is now on the Plasma team to rebuild trust by maintaining transparency and demonstrating sustained DeFi ecosystem growth.
As the initial volatility settles, the Plasma project’s long-term credibility will hinge on clarity around token distribution and its ability to deliver continued growth in the stablecoin and DeFi ecosystem.
