LIT Token Faces Insider Selling Scrutiny and Infrastructure Challenges

• LIT token faces scrutiny over alleged insider sales totaling $7.18 million since its launch according to reports.
• Lighter surpassed Hyperliquid with $198B in 30-day perpetual volume after token incentives as reported.
• Users report persistent withdrawal delays and system overloads due to infrastructure strain according to users.
• Whale accumulation at $2.33-$2.52 creates 15-20x valuation gap versus current prices research indicates.

Lighter (LIT) confronts mounting challenges following its high-profile token launch. The decentralized exchange faces allegations of coordinated insider token sales and infrastructure limitations despite record trading volumes. Whale accumulation at prices far above current levels signals deep valuation dislocation. Market participants now weigh LIT's growth potential against these emerging headwinds.

Why Are Investors Concerned About LIT Token Distribution?

Blockchain researchers identified coordinated LIT sales worth $7.18 million since the token generation event according to analysis. Five interconnected wallets received nearly 10 million tokens from the airdrop, representing 4% of circulating supply. The methodical selling pattern suggests deliberate liquidation rather than organic market activity.

Airdrop allocations favored entities like Jump Crypto, receiving over $24 million in LIT tokens according to reports. Concentrated distributions to clustered wallets amplified concerns about equitable access. The Lighter team has not clarified token vesting schedules or distribution mechanisms publicly. This lack of transparency complicates efforts to restore investor confidence.

How Did Lighter Achieve Record Trading Volumes?

Lighter recorded $198 billion in 30-day perpetual futures volume, surpassing rival Hyperliquid. The surge followed LIT's token launch and elimination of taker fees for most users. These incentives attracted high-frequency traders and liquidity seekers to the platform.

Total value locked (TVL) surged from under $200 million in August to $1.43 billion post-launch according to data. The 25% community airdrop and points-based loyalty program drove user engagement. Lighter now leads decentralized exchanges in perpetual volume despite Hyperliquid maintaining higher open interest.

What Challenges Does Lighter Face Post-Launch?

Users report persistent withdrawal delays and system overload errors since December 30 according to user reports. Post-launch demand overwhelmed infrastructure, causing transaction bottlenecks. These technical hurdles risk eroding trust as competitors offer smoother experiences.

Market structure presents another obstacle. Whale accumulation occurred at $2.33-$2.52 per token, but LIT now trades near $0.12-$0.14 research indicates. The 15-20x valuation gap reflects both protocol potential and recent controversies. Infrastructure upgrades and transparent governance are critical for price recovery.