Behind the collapse of GPS and SHELL: The complete operation chain of a currency circle "harvester"

Author: Fairy, ChainCatcher

Edited by: TB, ChainCatcher

Liquidity is the lifeline that maintains price stability, and market makers are the guardians of this lifeline. However, when the Guardian becomes a "predator", what kind of chaos will the market fall into?

GPS fell below the opening price 20 minutes after it went online on the exchange, and the price plummeted 74% from its high of $0.15. SHELL fell from $0.7 to $0.26. GPS and SHELL tokens have almost replicated price trend charts, as if controlled by the same invisible hand.

With the continued revelations from Binance investigation and community users, the incident quickly occupied everyone's weekend topics. A secret chain of interests gradually surfaced, and names such as Web3Port, Whisper, May Liu were pushed to the forefront, and the shady curtains behind the collapse were even more amazing than expected...

GPS and SHELL coin price trend chart

****Market makers unilaterally sell off, causing currency price to

collapse****

Binance announcement shows that the recent price abnormalities in GPS were directly caused by a market maker. The market maker only conducted a sell operation within 21 hours, failed to fulfill his buying obligations at all, and sold a large number of 70 million GPS tokens, making a profit of about $5 million. This selling behavior has caused the currency price to plummet and the market liquidity is almost exhausted.

Subsequently, Binance investigation found that both crypto projects entrusted the same market maker to manage the liquidity of their tokens.

So Binance removed the market maker from the shelves and banned it from continuing to engage in market maker activities on the platform. At the same time, Binance confiscated the market maker's profits through illegal operations and plans to use these funds to compensate damaged users of GPS and SHELL projects. The specific compensation plan will be further announced by the project party.

The mastermind behind the scenes emerged: the complete chain

of market manipulation

As the incident fermented, the community quickly digged deeper and uncovered the true face of the mastermind behind the scenes. This incident not only exposed a market maker that manipulated the market, but also involved an arbitrage chain that had been active in the currency circle for a long time .

Encrypted KOL @_FORAB revealed that the passive market makers of GPS and SHELL are GSR, while the active market makers are Shanghai team Web3Port.

Further investigation found that Web3Port allocated tokens to its associated market maker Whisper , which obtained internal permission under Web3port 's Binance account and performed continuous selling operations, which eventually led to a market crash. Many industry insiders have confirmed that Web3Port and Whisper belong to the same team, forming a complete arbitrage chain from token acquisition to monetization.

May Liu and "arbitrage assembly line"

Web3Port partner May Liu's long-term business operation model in the currency circle has surfaced - from Spark Digital Capital to Web3Port, to Whisper, she has created an arbitrage assembly line specifically for project parties and exchanges.

• Spark Digital Capital Era (VC Disguise):
  May Liu is active in the currency circle in the name of a VC institution, and actually mainly engages in market outsourcing and FA (financial consultant) business. She packages projects, gets free tokens, and then Spark Digital Capital lobbied other VC institutions to invest, turning these truly invested VCs into "takeovers" and she has no capital arbitrage.

• Web3Port Incubator (Free Token Exchange Service):
  After 2021 and 2022, as VC competition intensifies, project parties are increasingly reluctant to provide tokens for free, and this arbitrage model is challenged. Therefore, May Liu founded the Web3Port Incubator, which specializes in serving early-stage projects, provides packaging, guidance, docking VC resources, etc., and exchanged for a 1%-3% free token share.

• Whisper Market Maker (Monetization Export):
  Free tokens alone are not enough to complete arbitrage, so Web3Port also set up a Whisper market maker, which on the surface provides liquidity for project parties, but in fact it provides monetization channels for "own free tokens". Through internal authorization, Whisper can sell tokens on exchanges such as Binance and cash out, while retail investors have become long-term "cash machines".

@_FORAB said: "The so-called One-year Speed ​​Binance, to some extent, they did it and it took a long time."

****Controversy arises. Who should be responsible for this "garbage

market"?****

Market makers ** ** ** are untenable******

@yuyue_chris said: " The project party is equivalent to a "money printing machine", and the market maker is responsible for helping the project party cash out the tokens and split the accounts according to the agreed proportion . This kind of interest-bound relationship makes the market maker unilaterally violate the project party's wishes and unauthorized large-scale shipments are slim."

@silverfang88 said: "I think the decision to smash the market is likely to be made by projects and market makers . In the case of a sluggish market, market makers may recommend that the project party sell as soon as possible and not to make plans, because "Binance New Coins are all waterfalls", and the project party recognizes this and finally reaches a consensus, which jointly promotes continuous selling in the market.

On the other hand, the project party itself failed to attract enough buying orders , the market depth was insufficient, and it was difficult to withstand the selling pressure and expand the order book, resulting in the sell orders always dominant and the price continued to decline.

The Great Game talked about how the market makers on the New York Stock Exchange used the full openness of exchange information to use information gaps to control the market and cut leeks. ”

@0xJamesXXX said: "There is another problem that everyone ignores. According to the tokenomics disclosed by the project party, the tokens of investors/incubators are still far from unlocking time. But why does this institution have so many unlocked tokens that can be sold? Is the project party cheating investors? Or are they given these tokens in the name of other unlocking tokens such as airdrops?"

All parties are seeking profit and doing evil , ****and

the entire chain of interests**** needs to be reflected on

@forgivenever said: "The reason why the market is in the current dilemma is because the chain of interests of the entire industry is full of evil deeds, but it is also pretending to be confused when it comes to understanding.

Blaming individual scapegoats will not help solve the problem. What really needs to be reflected on is how exchanges, VCs, project parties, KOLs, market makers and other links have jointly led to the repeated harvest of retail investors. ”

****There are also many voices in the market regarding the handling of

Binance 's incident:****

@armonio_liang said: "If Binance's move is intended to reshape industry rules and promote the improvement of the exchange regulatory system, I would like to support this. Looking back on Wall Street's development history, many regulatory systems are derived from industry self-discipline to achieve a healthier market environment.

However, if this action is only a movement-style cleanup, intended to redistribute the interests between institutions and ordinary investors, then excluding market makers is more arbitrary than traditional financial markets and is difficult to be convinced. ”

Supporting Pat: Binance purifies the market environment

"Like Binance, if you do evil without cost, the originally neutral will gradually tend toward evil."

"Binance's operation is very powerful in protecting user interests and cracking down on violations. I hope other exchanges can follow up and jointly maintain market order."

“Binance reflects its emphasis on the community and its pursuit of industry equity.”

Opposition: Intervention in free market competition

“Although the approach is fair, it’s not decentralized.”

"Is Binance's "iron-fisted" rectification this time to protect the interests of retail investors, or is it intended to further strengthen its control over the market? After all, the subtle relationship between exchanges and market makers is well known in the industry, and Binance itself may not be able to stay outside of this system."

This storm caused by the GoPlus and MyShell incidents has involved deep-seated interests and lack of supervision in the crypto industry. The blame for market chaos on individual market makers is too simplistic and ignores the role of exchanges, VCs, project parties, KOLs and other parties in the interest chain.

So, who should be responsible for this "garbage market"?

The future may just be an endless "great game"...