If you've been following recent cryptocurrency news, then you probably know that Coinbase Pro has listed Basic Attention Token (BAT).
While the price has nearly doubled in the past few weeks, BAT is raising eyebrows for a different, not so positive, reason.
Basic Attention Token is is coming under intense scrutiny after its Coinbase debut.
Some cryptocurrency experts, such as Francis Pouliot, who has tens of thousands of followers on Twitter, have explicitly called it a Ponzi scheme:
$BAT is a Ponzi scheme.
Is it the most scammy utility token? Yes.
Are its creators aware? Yes.
Is Coinbase a complicit boiler room for listing it? Yes.
Epic thread relevant again 👇 https://t.co/ZnE9nvDqkt
— Francis Pouliot (@francispouliot_) November 3, 2018
It's worth noting that it's not the first time Pouliot has been critical of BAT.
Another interesting piece of information was raised earlier by Larry Cermak:
This wallet moved 3M BAT tokens 8 minutes after the announcement. After 20 other minutes, it finally moved 2M of these BAT tokens to Binance to liquidate. The value of these 2M tokens went from $523k to $631k in 10 minutes. The easiest $100k ever?https://t.co/5LRwoz22Em
— Larry Cermak (@lawmaster) November 2, 2018
Curiously, this address was one of the earliest receivers of BAT tokens back in June of 2017. Precisely on June 12, this same address received U$ 4.5 million dollars in today's values worth of Basic Attention Tokens.
Whoever moved the 4.5 million BAT today was a whale and early investor in the BAT ICO. It wasn't the only whale moving their tokens after the Coinbase news.
Why does it matter when this investor got into BAT? Because the Ponzi accusations stem from the fact that early investors got the largest piece of the cake and smaller investors could allegedly only get in late, as we'll see next.
The accusations of BAT being a Ponzi scheme are based on the fact that, during the ICO, a small group of investors seems to have snatched up over 80% of the BAT tokens. Not only was there immense concentration of tokens in the hands of few, but this happened extremely fast.
All Basic Attention Tokens were snatched up in less than 30 seconds or so during the ICO, while thousands of smaller investors protested for being left out.
The cryptocurrency community was naturally suspicious of the speed of the ICO and high concentration of tokens and the events of today, even if totally coincidental, seem to have solidified the belief that BAT was designed to benefit the early investors at the expense of those who got in later - something authorities always look for when investigating pyramid schemes.
To earn Basic Attention Token today you must either become a publisher or browse using the Brave Browser in order to receive free tokens. Large amounts of BAT are no longer being distributed anywhere.
The BAT received via Brave Browser is meant to introduce users to BAT. The browser is only capable of tipping websites - withdrawals are not possible. It's therefore a special kind of faucet.
So, let's try to get some sanity back in this debate by sticking to raw data and not personal opinion.
The chart below shows us the current concentration of BAT after today's movements.
It is visually clear that over 50% of all BAT is in the hands of less than 20 addresses. One is the BAT reserve account, seen in blue starting at 12 o'clock going clockwise. Then there's Binance and Bittrex, who received large deposits today and then 20 or so large investors still control approximately over 30% of the tokens. Another interesting statistic is presented by Etherscan: " The Top 100 Holders Collectively Own 80.41% (1,206,121,766.43 Tokens) of BAT".
So, even after today's large transfers, at the time of this writing the top 100 BAT owners collectively hold over 80% of Basic Attention Tokens. It must be said this this is not out of the ordinary by any means.
POWR : Power Ledger has even higher concentration than BAT.
BNB: Binance Tokens are mostly in the hands of Binance itself.
BAT is run by reputable professionals who are publicly exposed and very active on social media. The Brave team has repeatedly answered questions and clarified all issues that seem to come up, showing absolutely no signs of any foul play.
Obviously, high concentration of tokens in the hands of few is not a positive signal by any means, but it is not an indication of a Ponzi scheme.
If high token concentration were definitive proof of a pyramid scheme, then many similar projects would be immediately fall under suspicion.
In fact, concentration seems to be the rule, not the exception in cryptocurrency projects. For example, just 4% of Bitcoin addresses hold over 96% of all the coins.
In our opinion, BAT is not a Ponzi scheme. Although, to be fair, you could argue that the ICO speed and distribution policy may have been unfair to small investors in May of 2017.