- MegaETH revoked a $1 million token allocation from an investor after he openly discussed hedging strategies on social media.
- The token sale raised $50 million, significantly oversubscribed with over $300 million pledged.
- MegaETH prohibits hedging as part of its token sale rules and enforces refunds and zero allocation for violators.
- Opinions in the crypto community are divided over the enforcement of the no-hedging policy.
- It remains uncertain how MegaETH will monitor or enforce this policy against private or external hedging.
An investor participating in MegaETH‘s $50 million token sale lost his allocation after publicly mentioning plans to hedge his position on November 8. Known as IcoBeast, a crypto influencer with 67,000 followers, revealed that his allocation was worth nearly $1 million and expressed intent to hedge via options, including puts, according to his posts on X (formerly Twitter) see here and here.
Hedging is a financial strategy to offset potential losses in an asset by taking positions that gain value if that asset declines. For cryptocurrencies, this often involves derivatives that pay out when token prices drop.
The following day, IcoBeast announced that his allocation had been revoked and was now worth $0. MegaETH Labs confirmed the decision, with Namik Muduroglu, chief strategy officer, stating in a post on X that openly discussing plans to hedge or sell tokens violates the sale rules see here. He explained that allowing token allocation to buyers intending to sell immediately “makes no sense.”
MegaETH is a blockchain project based on Ethereum, aiming to reach 100,000 transactions per second through parallel transaction execution. Its October token sale was oversubscribed, drawing more than $300 million in commitments despite a $50 million target.
The decision to revoke IcoBeast’s allocation has sparked mixed reactions. Some praised the move, viewing it as protection for the project’s long-term goals. Simon Dedic, founder of Moonrock Capital, supported the action in a post on X, calling it a strong signal for the community and token holders.
Others criticized the policy. A crypto influencer known as Grug called the ban on hedging “nuts” and pointed out that such practices are difficult to monitor or enforce, especially when participants can hedge using separate wallets or private agreements source.
Initial coin offerings (ICOs) have experienced renewed interest lately, with investors chasing high returns similar to those seen with Bitfinex’s Plasma XPL token, which surged by over 2,300% at launch but later dropped nearly 77%. ICOs have a complex regulatory history, especially in the U.S., where stricter oversight followed the 2017 boom.
Requests for further comment from IcoBeast, MegaETH Labs, and Muduroglu went unanswered at the time of reporting.
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