Salman Khan-Backed GARI Token Wipes Over 80% Of Investor Wealth In 24 Hours

Bringing back the troubling memories of Terra’s LUNA crash, Salman Khan-backed short video platform Chingari’s crypto token GARI has slumped over 80%. 

On July 4, 2022, at 9:37 PM, the token was trading at a value of $0.72 (INR 57), and exactly one hour later, the GARI token was trading at $0.13 (INR 10), further falling to $0.1 (INR 8) shortly before midnight, and reaching an all-time low of $0.09 (INR 7).

While the crash concerned users, the company refuted the rumours of the same being hacked in an official statement and claimed it was just market movement. It added that all GARI tokens were safe in the respective reserves, suggesting no wallet key compromises.

The Twitter statement by GARI Blockchain said, “After a thorough evaluation, there has been no hack identified on the tokens’ side. So far, this looks like a market event.” 

It added that the GARI token was affected majorly on Kucoin where a $2 Mn worth sell order happened at 9:40 PM on July 4, 2022. This pushed the token price to $0.14 suddenly as the market maker didn’t provide enough liquidity to handle it, the company stated.

According to TechCircle, Kucoin CEO Johnny Lyu also expressed that while the crypto exchange is a neutral platform, it is also the most liquid market for GARI. 

“The price difference between exchanges existed for a few minutes, but it was soon erased as people made arbitrages between exchanges, buying low at KuCoin and selling high elsewhere,” Lyu said, as has been reported by TC.

A Black Swan Event, Claims GARI Blockchain

The incident has raised questions about the reason for the sudden crash. Speculations were also rife if it was insider trading; which was also refuted by the company. However, it brought back the recent memories of the crash of stablecoin LUNA, which wiped nearly 99% of the investors’ wealth in one day even when it was pegged to a fiat currency.

Similar to LUNA’s crash, triggered by a huge investor sell-off, GARI’s drop had also been caused by ‘cascading liquidations on Kucoin’. The dumping [of the token] in the open market caused the price of GARI to go down to $0.13 causing a black swan event, the company said in a statement. 

The token is presently trading at $0.16.

Homegrown short video platform Chingari unveiled its crypto token GARI in October 2021, shortly after it raised $19 Mn in a Series A, token-based round. 

The token was unveiled by Bollywood actor and one of Chingari’s investors, Salman Khan, who would then be the brand ambassador of Chingari’s NFT marketplace and the GARI Token.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.