Kaddex — The Hypercent connection
Background
This is a quick follow-up on my previous article from two days ago, where I disclosed that Kaddex bought their own public sale using investor funds from the private sale. Earlier today Mandrake, the digital profile of the Head of Finance of Kaddex, currently Daniele de Vecchis, released a statement regarding the incident. I didn’t have much time to write this, so there might be some spelling errors or mistakes, sorry! Statement from Mandrake below.
In this article I don’t want to go too deeply into this statement, the meaning of it and the consequences. I have an opinion about it, but it’s up to the community to decide. I want to talk about what we learned from this statement and provide you with another piece of interesting on-chain data. I’ve already told you I want the best for Kadena and the ecosystem and I still mean that. I want to get rid of all bad apples. The purpose of this article is to present the community with data so they can decide if people or a single person within Kaddex are bad communicators or bad actors judging by their actions toward the community. It seems like the same tactics used to buy the Kaddex private sale, has also been applied (by Kaddex) to the Hypercent IDO, victimising Hypercent and HYPE buyers. Is what they did illegal? Probably not, is it considered unethical to whale buy and dump on a partner project, I’ll leave that up to you to decide.
What did we learn from the statement?
Because Mandrake admitted the buys were from Kaddex we know they had a way through Tokensoft KYC. I find it safe to assume that Tokensoft is a reputable company doing a plethora of KYC’d sales for various projects on various chains. It’s more likely that that they bought KYC’s where people did KYC for them. Mandrake and Kaddex have yet to deny that they used bots in their polls, regardless, it’s quite easy to buy bots, certainly for Telegram, I think we all know that. In the Kaddex buy incident we learned what is needed to accumulate a massive amount of tokens: bots and KYC.
The Hypercent IDO
Recently Hypercent held their IDO. They are a partner of Kaddex. On-chain data shows an account tied to Kaddex buying into the Hypercent IDO multiple times and immediately dumping afterwards. I’ll leave it up to you if you consider this unethical whale behaviour, especially when you do this to the IDO of an organisation which you are partnered with. This is the account: 6e3d0a77bc7e3fefccf13d7a5507dd0bdaa1f14d64ab2922bec037c0e096ec5e. First I will show you why it’s interesting, in the past this address received 150k KDA from kdx-bank, so we know it’s a Kaddex insider. Here is the tx: https://explorer.chainweb.com/mainnet/txdetail/QZJwXtU98TPQ0kdffgvSLUkxORYFXxwqYuwQFxHgX24
This address funds 9 addresses with 240 KDA which all buy the max allocation of HYPE.
This is the list of addresses:
k:0e05d0d74bc5b99488be9e71a563add0505f389c619675c1ada2a1c110a89425 k:2cb7846f2c1edf281e620bec8dac3c082f6ef0fb2d44f3982d2114564711c249
k:fd91fcc14e969cd93170b93b73412fc581a052512c9e76eb4502d7544373393a k:9daf096b2f2388726b6e44ff5f21a235e187a4f1ea93414db97081d267c75d2e k:88cec66f4c04655de3125b70458de40343c2013dd4eac54bae6ae2336c410f95 k:c456a297feccabde1bed5d2f8bfb095a7c870484241d668dd166f7da30a54951 k:deae95b8583bddde2b044c3e83a571981cfd8d4993fee41f50956cb91e15e3df k:8bb184a878e7701ad3919889bc909d1e45daa6496b153a26cd109d6285446314
k:4c1f82cc14103b43d7eb34fe2ada58c444f31e76154cdca399734d278bb5a13b
One example of funding below, from this tx: https://explorer.chainweb.com/mainnet/txdetail/G8PtQus2AqAjA156bJWB9SNuGqG21AkBj5H58OmkcoU
Subsequentially buying HYPE with that KDA, here is the tx: https://explorer.chainweb.com/mainnet/txdetail/AlNKR7Yu55O7WtbRTjB_klsZ0RdnTuL4_uiwTwCkmzg
All the addresses transfer their HYPE to address k:0e05d0d74bc5b99488be9e71a563add0505f389c619675c1ada2a1c110a89425 which dumps all HYPE on Kaddex. Example below and here is the tx: https://explorer.chainweb.com/mainnet/txdetail/Dod0dIwoKxpKtfj7ISWh-K4RX2UEALGfANbehBtYdnY
All the HYPE is redeemed, up to 990 is redeemed from the addresses, converted to KDA and part of it is sold on Coinmetro. Coinmetro is a KYC exchange, so the account being sent KDA should also be KYC’d. This may or may not be illegal — this account has intermingled funds from various different legal persons and deposits into a single KYC’d Coinmetro account. However I’m not a legal expert so I cannot judge on the legality. Tx again for sending it to Coinmetro below: https://explorer.chainweb.com/mainnet/txdetail/UaUT6L4yBBGkqK-H6F5f9QY-jPs7O_vCR6_xJmtKrt4
This is not a numbers game. The amounts are not that significant, $1.5k USD * 9 is approximately a 10k investment, which they immediately 3x’d. Of course they did so by dumping on HYPE investors and taking a spot of a legal person wanting into the IDO but who was not accepted because this account with 9 bots got in multiple times. This is about ethics and way of working.
Reach out to Hypercent
The day after my publication of previous article I reached out to Alex Dnlache, co-founder of Hypercent. I told Alex about my findings and he was very receptive. He mentioned they applied an anti-whale policy as best as possible and didn’t want the same person buying into their sale multiple times. Hypercent took it upon them to contact the KYC institute to verify if these addresses had legitimate KYC. The KYC company confirmed them to be legitimate persons, with ID and selfie. I commend Hypercent for going to such great lengths to prove their legitimacy and dedication to the protect the community. Understandable and unfortunate, Alex could not do much about this situation because the KYCs checked out. I want to stress that Hypercent is not hacked and the KYCs seemed to be legit (they could have been bought). Furthermore I think Hypercent did everything in their power to prevent whales, but some are just too slippery and slip right through. My hope for the future is that bots and whales will be properly countered on Kadena IDOs.
The new questions for Kaddex
Mandrake said we could ask questions, so once again I would like to depend on your transparency. Who does address 6e3d0a77bc7e3fefccf13d7a5507dd0bdaa1f14d64ab2922bec037c0e096ec5e belong to? Was this a person acting on their own or was this Kaddex buying the Hypercent IDO? If neither, why did this person receive funds from kdx-bank? How did Kaddex “fake” or abuse Tokensoft KYC? If it was a person, did this person “learn” the skill of faking KYC at Kaddex? If it was Kaddex, will Kaddex apply this tactic upon more (partner) projects holding an IDO in the future? Do you think whales who dump on (partner) projects like this are a valuable addition in working with or for Kaddex?
I think it would be great for the community if we could catch this whale dumping on the community together!
Update 20/04/2022: This answer from Mandrake is possible. I can accept they were likely not involved in the Hypercent sale.
