Nillion (NIL) extended its losses, sinking to an all-time low. The token crashed following unauthorized selling from a market maker.
Nillion (NIL) is the latest token to crash based on rogue activity from a market maker. The asset saw erratic price action starting on Wednesday, and extended its slide to an all-time low.
NIL slid to $0.11 following reputational damage from the project. The token started trading at $0.72 in April and has been sliding ever since, with small relief rallies.
Nillion was a recently launched computation and storage network with privacy features. The services allowed the building of personalized AI, encrypted databases, and privacy-preserving applications.
Nillion blames NIL slide on actions of unauthorized market maker
More than 31% of NIL trading volumes are concentrated on Binance. This brings additional liquidity to NIL, while also making it vulnerable to large-scale traders.
Many new tokens use market makers, though usually the special traders provide liquidity on both sides of the market. This time, the market maker sold aggressively, causing the steep crash from $0.19 to $0.11.
Previously, Binance banned some market makers for crashing the price of new tokens.
Nillion team attempts to compensate traders
NIL is a highly liquid token with over $151M in volumes for the past day. During the recent sell-off, NIL posted the highest volumes since its market debut in April.
The token also has a small derivative market with $11M in open interest, causing nearly $800K in liquidations during the recent crash.
The team did not expect the crash, and later investigated the main reason, connecting the selling to the market maker.
“Our entire team was confused until we realized what happened: a market maker sold NIL tokens without legal authorization from the Nillion Association. Then refusing to respond to any team communications during the flash sell and hours following,” announced the team through its X account.
The Nillion Association will use its treasury to buy back NIL tokens. Additionally, the team will seek to freeze the wallets of the market maker, banning its activity on exchanges. Nillion still refused to name the market maker, despite being pressured by its community.
NIL has been propositioned by crypto influencers, but has a limited market share on social media. The relatively recent token still gained listings on prominent exchanges. NIL activity is also highly concentrated on centralized exchanges, with just 106 holders having tokens in their self-custodied wallets.
The token has not revealed any insider or whale activity, but has instead encountered rapid centralized selling. The Nillion team immediately distanced itself from the unnamed market maker to avoid accusations of actually requesting the sale.
NIL has a trading structure with a significant share of activity against the Korean won and the Turkish lira. The recent price drop significantly affected South Korean traders, who may now seek redress.
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