Key Takeaways
- Prolific blockchain investigator ZachXBT expressed frustration with scammed XRP holders, labeling them “exit liquidity for insiders” and stating he will not help them due to a lack of support from the Ripple foundation.
- “Exit liquidity” refers to new, often uninformed, investors who buy a token at inflated prices, allowing early investors and insiders to sell their holdings for a profit.
- The incident underscores the long-standing tensions within the crypto community regarding a lack of “public goods” funding from major foundations and the growing problem of airdrop-related scams.
In a controversial statement, blockchain investigator ZachXBT has publicly expressed his frustration with scammed XRP holders, calling them “exit liquidity for insiders.”
The prolific on-chain sleuth, known for his work in tracking down crypto criminals, has stated that he is disinclined to help members of the Ripple community who fall victim to scams, citing what he perceives as a lack of support from the Ripple foundation for its own user base.
The comment has ignited a debate about the responsibilities of crypto projects and the role of communities in protecting their members.
The Anatomy of a Crypto Scam
The catalyst for ZachXBT’s comments was an XRP holder who lost over $33,000 to a malicious wallet app, likely a classic “airdrop scam.” In these schemes, scammers lure users with the promise of free tokens, tricking them into connecting their wallets to a malicious smart contract that drains their funds.
In this context, the term “exit liquidity” is a pointed one. It refers to a situation where a new wave of retail investors buys into a token at an inflated price, allowing insiders and early investors to sell off their holdings for a massive profit.
ZachXBT’s frustration stems from a pattern he has observed where the same communities repeatedly fall victim to these schemes, while the projects behind them, in his view, fail to adequately fund public safety initiatives.
A Public Goods Problem
ZachXBT’s critique is rooted in a broader argument that foundations like Ripple, which hold massive treasuries, should be funding “public goods” such as on-chain forensics services and educational resources to protect their users.
He contrasts this with other networks he claims are more proactive in this regard. The issue is further complicated by the history of Ripple co-founder Chris Larsen, who has made headlines for both his philanthropy and his personal financial dealings.
Final Thoughts
ZachXBT’s blunt assessment of scammed XRP holders as “exit liquidity” is a harsh but honest look at a systemic problem in the crypto space. It highlights the growing tension between a project’s financial success and its responsibility to protect its community.
As a self-funded investigator, his decision to focus on cases that “add value to [his] work” is a pragmatic one, but it leaves thousands of scammed users with few options.
Frequently Asked Questions
What is “exit liquidity” in crypto?
“Exit liquidity” refers to the new money that enters a market, allowing early investors and insiders to sell their holdings for a profit, often at the expense of new, uninformed traders.
Why is ZachXBT frustrated with XRP holders?
ZachXBT is frustrated with the perceived lack of public goods funding from the Ripple foundation to protect its community, leading him to believe that he is wasting his time helping users who are repeatedly falling victim to preventable scams.
What is a common airdrop scam?
A common airdrop scam involves tricking users into connecting their wallets to a malicious website or smart contract, which can then be used to drain all the funds from their wallet.
