LIT Token Faces Volatility After Justin Sun Buys and Insider Sale Claims

• LIT token plunged 30% amid allegations of $7.18M insider sales.
• Justin Sun-linked wallets accumulated $33M LIT, securing 5.32% of supply.
• Tokenomics face scrutiny over 50/50 allocation between team and ecosystem.

Lighter's LIT token faces intense scrutiny following conflicting whale movements and token allocation debates. Recent blockchain data reveals Justin Sun-linked wallets accumulated $33 million in LIT tokens, securing over 5% of circulating supply. Simultaneously, coordinated sales of $7.18 million worth of LIT by five wallets sparked insider trading concerns. The token dropped 30% from its $3.35 launch price to $2.47 amid these developments according to market analysis.

Why Did LIT Token Price Drop 30%?

LIT slid sharply after coordinated token sales. Five wallets sold 2.76 million LIT worth $7.18 million shortly after launch. This triggered $250 million in platform withdrawals, including $52.2 million from Arbitrum as reported. The sales pattern suggested deliberate liquidation rather than organic trading activity. Analysts identified these wallets received 10 million LIT from recent airdrops then sold nearly 28% of their holdings according to data. The rapid sell-off caused liquidity pressure and damaged market confidence as market reports indicate. Token volatility spiked amid poor communication about allocation mechanisms.

How Significant Is Justin Sun's $33M LIT Purchase?

Justin Sun-linked wallets accumulated 14.89 million LIT. Four wallets associated with the entrepreneur each received 1.6 million LIT tokens after Lighter's token generation event according to blockchain data. They later spent $33 million purchasing 13.25 million additional tokens on open markets. This positions Sun with control over 5.32% of circulating supply and 1.39% of total tokens as reported. Blockchain data indicates this activity served liquidity provisioning rather than airdrop farming according to analysis. The involvement brings both attention and centralization concerns to the DeFi protocol.

What's Behind the Tokenomics Controversy?

LIT's allocation model faces community backlash. The token distribution splits 50% to the ecosystem and 50% to internal stakeholders. Specifically, 26% went to the team and 24% to investors according to project disclosures. While team and investor tokens have one-year locks followed by three-year linear vesting, social media critics call the structure unfair as analysts note. Only 25% of total supply entered circulation initially as market data shows. Industry experts note balanced tokenomics are crucial for sustainable exchange growth according to market analysis. The situation highlights rising demands for clearer vesting disclosures.