The Sui Foundation has firmly denied claims of insider selling. Allegations surfaced about a $400 million selloff of SUI tokens by insiders, sparking a strong reaction from the cryptocurrency community.

A well-known crypto analyst named Light conducted an on-chain investigation that fueled the controversy. He suggested that large transfers of SUI tokens to exchanges like Binance, OKX, and Bybit came from wallets linked to the Sui Foundation.

Light's findings revealed that during a time when SUI token prices were rising, a major wallet belonging to the foundation transferred millions of tokens. These tokens, valued at around $400 million, likely ended up in the hands of insiders. While he didn't disclose specific wallet addresses, he did mention an infrastructure partner associated with the Sui Foundation.

One key staking account (0x7f3b…3239e4) holds 183 million SUI, worth about $418 million. Light also identified several other addresses connected to significant SUI transfers.

Another important address (0xbe90…950aa8) has acted as a transit wallet. It has been used to send tokens in small, frequent transactions to another address (0x457f…6715e7). This second address is linked to major exchanges like Binance, OKX, and Bybit.

Since late June, the transit wallet (0xbe90…950aa8) has redeemed over 82.6 million SUI from the staking account. It currently holds 10 million SUI tokens. These transfers, especially those to exchanges, have raised concerns about possible large-scale insider selloffs.

Scrutiny surrounding SUI isn't new in South Korea. Back in 2023, the Sui ecosystem faced questions during a National Assembly audit. The focus was on the unclear management of SUI token allocations.

Adding to the situation, South Korean media outlet Block Media noted similar wallet activity in June. They reported that these transfers were not isolated. Interestingly, the wallets didn't send tokens directly to the well-known Korean exchange Upbit. Instead, they funneled through Binance, OKX, and Bithumb.

The report stated, “It’s worth noting that there were no direct transfers from the Sui Foundation to Upbit. Instead, a series of transfers totaling 95 million SUI coins moved from Binance, OKX, and Bithumb to Upbit. This unusual pattern, along with Upbit’s compliance with ‘Travel Rule’ regulations, raises questions about the SUI coin transfers and calls for clarification from the Sui Foundation.”

Initially, Upbit held a strong position in SUI trading, controlling over 20% of the market at its peak. Though that share has dropped to 7.5%, Upbit remains significant, trailing only Binance, which holds 16.5% of SUI trading.

In response to the allegations, the Sui Foundation issued a statement. They denied any involvement from their employees, insiders, or foundation members in the alleged $400 million token selloff. The Foundation insisted that neither their staff nor those from their partner, Mysten Labs, sold tokens against lockup agreements or the circulating supply schedule.

The Foundation clarified that Light’s reference was to an infrastructure partner holding tokens under a lockup schedule. They emphasized that qualified custodians manage all token lockups, and the partner is fully compliant with the terms.

Despite this, the ongoing investigation and the transparency of SUI’s token distribution remain under careful observation. The crypto community continues to monitor these transfers closely, seeking more clarity on the actions of major holders and their impact on SUI’s market value.

As of now, BeInCrypto data shows that the SUI token has decreased by 0.67% amid this controversy, trading at $2.23.