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Helium (HNT) has been one of the more popular crypto projects due to its efforts to create the so-called People’s Network and help provide miners with a less expensive method of meaning crypto tokens. At the same time, the project seeks to provide a network for the Internet of Things, which would allow various IoT devices to connect to one another, communicate, and store information such as sensor readings and alike.
However, the project recently came under heavy fire as a new controversy emerged as a result of a Forbes investigation. Allegedly, the project’s insiders failed to disclose Helium’s centralized distribution of HNT tokens. More than that, they allegedly took advantage of the Helium system to earn even more rewards.
Who are the Helium insiders?
The project’s idea involving the creation of the low-power network coverage for IoT projects via the hotspot devices in users’ own homes has so far been a huge success, which has drawn countless users to Helium. However, insiders of the People’s Network seemingly started hoarding massive rewards for themselves at some point, and after noticing that the alarms did not go off — they kept doing it.
A combination of blockchain data, leaked documents, and interviews with former Helium employees has revealed the existence of an inner circle of friends and family who have taken advantage of the project in a major way. Specifically, when Helium rewards per hotspot reached their peak, as much as two-thirds of the rewards were mined by the insiders, and only around 30% went to the community.
Forbes, during its investigation, identified around 30 crypto wallets that are believed to belong to Helium investors, employees, friends, and family members. Together, these inner circle members allegedly farmed nearly half of all mined tokens in the first three months following the project’s launch. The investigation deduced that this amount translates to approximately 3.5 million HNT.
Six months after the project’s launch, more than a quarter of circulating HNT belonged to insiders, and by the time the token price reached its peak, in November 2021, that amount was worth $250 million. Of course, a full year of bear market has knocked down the prices, leading the value of said tokens to crash to $21 million.
Helium's questionable practices
The project’s co-founder and chief executive, Amir Haleem, stated that half of Helium’s initial hotspots were given to the so-called insiders. As a result, he says that the numbers do not feel unreasonable to him, or egregious in any way. The greater concern, however, is that Helium failed to disclose this information with its community.
Haleem responded that he does not see a reason to do so, as the insiders simply joined the project early, they took a risk, and they were rewarded when that risk paid off. While some may agree with this point of view, others are already claiming that the insiders cheated the system by taking advantage of it early on.
More than that, Forbes also discovered that Helium employees started building the so-called closet clusters, where they placed multiple devices close to one another in order to boost the signal and mine tokens faster. Meanwhile, they were able to artificially change the devices’ location in order to make it seem like they are further apart, which allowed them to cover their tracks. However, when other community members tried this approach, Helium itself cracked down on them, banning over 70,000 hotspots to date.
To learn more about Helium, visit our Investing in Helium guide.
Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.