Chingari's crypto token GARI loses over 80% in a day, KuCoin denies role

Cryptocurrency token GARI, based on the private GARI blockchain network owned by Indian short video and social network platform Chingari, is the latest crypto token to have taken a nosedive. The crash has raised concerns on the reason, bringing back recent memories of when stablecoin LUNA, belonging to the now-reformed Terra blockchain, saw nearly 99% of its value wiped out in one day – despite being pegged to a fiat currency.

According to data from crypto market tracker Coinmarketcap, the price of GARI started showing a downward trend from Friday, July 1 – falling below ₹62 on the day. However, between then and the late hours of Monday, July 4, GARI had only fallen to around ₹57.7 – a fall of around 7% over a span of three days. While showing a clear decline, such a fall was not entirely surprising given the present crypto market, which has seen massive decline in essentially every token.

However, prices of GARI plummeted abruptly from around 10PM IST yesterday. In two hours, GARI had crashed to around ₹8 – a drop of over 86%. It has since risen by nearly 75% from its lowest-ever price, and at the time of publishing, is trading at ₹13.4.

A statement issued earlier today by the promoters of the 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.” The company further added that all GARI tokens were “safe in the respective reserves”, suggesting no wallet key compromises.

The statement further noted that the situation was being assessed in cooperation from all private crypto exchanges where GARI was listed.

The abrupt crash initially appeared to be a similar event to the depegging of the LUNA stablecoin, which began due to the mass sell-off from crypto whales that held LUNA and its algorithmic stablecoin partner, TerraUSD.

A crypto whale is typically referred to as a wallet that holds more than $1 million in the value of a crypto token. Mass sell-off from such holding wallets could potentially cause crashes such as GARI’s crash in value over the past 24 hours.

A number of users took to Twitter to suggest that such a sell-off from private crypto exchange KuCoin is what led to the crash in GARI’s price crashing today. In response, Johnny Lyu, chief executive of KuCoin, maintained that the exchange is a “neutral platform”, and “has nothing to do” with this crash.

“In the initial stage of the dumping, the price was lower at KuCoin because we are the biggest and most liquid market for GARI, most traders chose to sell here. 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 added.