Pancakeswap’s trading competition was supposed to reward random winners, but blockchain records show that about half of the 1,700 victory wallets are part of a connected cluster.
The competition was second and structured for investors to earn points by trading five sponsored tokens for the Binance Alpha program: League of Traders (Lot), Bedrock Dao (BR), Milkyway (Milk), Nodeops (Node), and Moonveil (Details).
To accumulate points, the transaction had to be carried out in PancakesWap, a top distributed exchange (DEX), with the total value locked in the BNB chain designed by Binance.
Introduction to the campaign, Pancakeswap said that winners who reach the three-tier trading volume threshold will enter a “random lucky draw.”
Despite the lottery-style reward format, Cointelegraph has learned that at least 850 wallets selected as winners are funded by other winning wallets. These wallets transferred each other’s BNB (BNB), the native cryptocurrency of the BNB chain. I then passed the BNB to the next wallet and repeated the process.
“The wallets were directly connected to each other and they were chosen. The chances of that happening in a row are close to zero,” a trader representative told Cointelegraph.
“The (prize) was not distributed fairly to participants,” the representative said, adding that the winners appear to have been “hands-picked” rather than randomly drawn.
Pancakeswap did not respond to Cointelegraph’s request to comment on the story. Cointelegraph also contacted four other sponsors and did not receive responses prior to publication.
Pancakeswap’s $250,000 trading lottery
Pancakeswap has remained at the heart of the BNB ecosystem since gaining traction in 2021, with high Ethereum gas prices driving traders into cheaper alternatives.
League of Traders told Cointelegraph that Punkak Wap had recruited the Vinance Alpha Project to sponsor its second trading contest, each posting $50,000 to fund the prize pool. Binance Alpha is a platform that allows investors to access pre-listed tokens early.
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League of Traders and four other Binance Alpha projects have increased the value of the reward pool to $250,000.
To participate in the trading competition, investors simply had to accumulate trading volumes of Pancakeswap sponsored tokens. The pool was split into three layers: $2,000, $5,000 and $10,000.
Participants could participate in random draws for all five tokens, but were unable to select multiple times for the same token. This will result in the maximum reward for one wallet of $2,500.
Initially, the trading competition was scheduled to take place from July 7th to July 27th, but it has been extended until August 5th.
Blockchain Trails tie up random winners of Pancakeswap
A Pancakeswap blog post states that the winners are randomly selected, but blockchain records suggest that they are not.
Take a picture of wallet 0x521…3E670. For example, a tier 3 winner received 21,730 lot tokens from the competition’s reward wallet on August 7th.
The winners of this lot were able to raise funds for these wash trades at $2,130 or 2.7 bnb. Within a minute the circle trade began, I received a BNB from another tier 3 winner in More (0x463…5D040).
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Looking at more winners’ wallet activities showed the same pattern. They received BNBs from the wash trading wallet, which was ultimately chosen as the winner, and used those funds to lend their own transactions for another sponsored token. Again, when the washing trade ended, it was shipped from the remaining BNB to another wallet that became the winner.
In a document shared with the Cointelegraph, the League of Traders identified 852 suspected winners who belong to this wallet cluster.
“They used the same source of funding…and when it was time to distribute the awards, all of these chain wallets received the awards.
Pancakeswap promotes the next trading competition
For projects that featured tens of thousands of dollars to sponsor the competition, the controversy highlights concerns about the transparency of the BNB chain’s flagship platform.
Pancakeswap recently signed its third trading competition. This time it wasn’t focused on Binance Alpha Alumni and featured six tokens and a $300,000 reward.
On X, “2,040 random lucky winners have been rewarded with their respective project tokens. Check your wallet to see if you’re one of them.”
Pancakeswap added that the next trading competition “is coming soon.”
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