Investor confidence in SUI has been shaken over the past 24 hours as allegations of $400 million in insider trading surface.
The incident dealt a major blow to SUI, which had been on a strong run since last Tuesday, up 11.0%, and derailed the massive 120% rally that had made it the leader this month.
In fact, investor sentiment towards SUI has changed significantly, with trading volume dropping by 22.27% over 24 hours to $946 million .
SUI insider trading allegations
The allegations began with an October 14 post on X by Light , a crypto analyst who operates under the pseudonym, who questioned SUI’s current valuation and claimed that claims that SUI would follow Solana’s path were “no longer valid.”
One thing that I've found more and more baffling in the last few weeks is the vertical ascent of SUI, with it quintupling off the lows (Ex 1). The market is starved for winners, and believes it has found one here, yet it all feels awfully chintzy for two reasons that I think feed… pic.twitter.com/VKISXpdxp1
— light (@lightcrypto) October 14, 2024
At the center of the controversy were allegations of insider trading, with Wright alleging that insiders, including wallets associated with the foundation, had profited significantly from the sharp price surge by selling $400 million.
According to him, insiders claimed that “large-scale selling began at very low prices and accelerated at higher prices.”
In response, Sui Network issued a statement to X, denying any wrongdoing. Sui stressed that the insiders “did not engage in any pre-selling or lockup violations.”
Following an allegation of “Sui insiders selling $400M in tokens throughout this run-up,” Sui Foundation would like to respond directly to this individual:
1. No insiders, neither employees of the Foundation or Mysten Labs (including Mysten Labs founders), nor ML investors,…
— Sui (@SuiNetwork) October 14, 2024
Instead, Sui said the sale was made by an “infrastructure partner” who had complied with the lockup schedule enforced by the accredited trustees.
Is Sui’s future stable?
While there is currently no clear evidence of wrongdoing, speculation that insiders are pocketing the cash raises questions about SUI’s long-term prospects.
This question makes us re-examine the bullish indicators that have been present on the recent SUI price chart. In particular, despite the successful breakout of the cup and handle pattern, the current Relative Strength Index (RSI) is at 80, indicating overbought conditions and a short-term correction is likely.
These concerns reflect skepticism about whether SUI’s $23 billion fully diluted valuation is justified, with Wright questioning whether SUI has “shown even a quarter” of Solana’s potential.
Therefore, a downward correction may be expected in the short term, with the pattern upper limit of $2.0725 likely to become a significant level.
However, the $114 million token unlock scheduled for October 23rd poses an additional challenge of 2.32% of the circulating supply, with over 28% of the total SUI supply already unlocked.
On the optimistic side, if SUI can break through its current pattern, a conservative target of $3.75 by 2025 is expected. Additionally, the exponential growth and adoption of the SUI ecosystem increases the credibility of further price increases, potentially reaching $5.
While Sui could continue its upward trend, the massive selloff raises significant concerns for new investors. Wright warns that when it comes to tokens being sold by insiders to retail investors, “there is only one ending.”
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