Edel Finance, a purported tokenised stocks platform, is in the hot seat after hundreds of suspicious transactions marred its recent token launch.

On November 12, Edel Finance launched its EDEL token, which the project called a “fair-launch,” with only 12.7% of the one billion tokens going to team members.

But an onchain analysis conducted by Bubblemaps and reviewed by DL News found that a cluster of 60 wallets linked to the project scooped up more than 30% of the newly-launched token.

At the EDEL token’s current value, the haul is worth around $11 million.

On social media, James Sherborne, an Edel Finance co-founder, did not deny that his team had sniped the tokens.

He said the transactions were part of a planned manoeuvre to place 60% of the token in a vesting contract, a smart contract that automatically releases tokens to recipients over a predetermined schedule.

Token sniping is the practice of using bots to purchase newly-launched tokens the moment they become available on a decentralised exchange. The goal is often to acquire tokens at the lowest possible price before other investors can react.

Obfuscation techniques

Yet Sherborne’s response raises more questions than it answers.

DL News found no public record of Edel Finance stating that it planned to snipe tokens in advance.

The project’s tokenomics page, which Sherborne says backs up his statement, does not mention placing 60% of the EDEL token supply in a vesting contract.

Sherborne didn’t respond on X when Bubblemaps questioned those issues in his own thread.

What’s more, the sniping transactions involved sending the tokens through dozens of additional wallets and moving the tokens in and out of liquidity provider positions on Uniswap, the decentralised exchange.

While those transactions in themselves don’t constitute any inherent wrongdoing, such behaviour is often used by those seeking to obfuscate transaction traceability.

Sanctioned North Korean Lazarus Group — a cybercriminal organisation — routinely sends funds through multiple wallets to launder crypto assets it has stolen from crypto exchanges and DeFi protocols, according to Elliptic, a blockchain security firm.

Sherborne didn’t explain why he felt it necessary to segregate the tokens by sniping his project’s launch instead of simply sending the tokens directly to the vesting contract.

DL News asked Sherborne why the transactions that he claimed responsibility for employed obfuscation techniques.

Sherborne and Edel Finance didn’t respond to multiple requests for comment.

Lack of transparency

Edel Finance, founded earlier this year, paints itself as a global lending network for tokenised stocks.

The project promises to build “next-generation securities lending infrastructure,” that is “transparent, efficient, and built for scale.”

Several of Edel Finance’s co-founders and advisers have backgrounds at top firms, which the project leverages to drum up interest.

One co-founder, Giles Colwell, previously worked at Bank of America and JPMorgan. In 2021, he began a stint at crypto lender BlockFi, which filed for Chapter 11 bankruptcy in 2022 while Colwell served as an executive at the firm.

Rolando Gonzaga, an adviser, previously worked at Uber and at crypto exchange Binance’s US arm.

Edel Finance isn’t the first project to be marred by suspicious activity surrounding its token in recent months.

Earlier this month, Apriori, a trading infrastructure startup developed by former Jump Trading, Coinbase and Citadel Securities engineers, came under fire after onchain records showed suspicious activity surrounding its token airdrop.

An analysis, reviewed by DL News and reported by Bubblemaps and several other onchain researchers, found that approximately 80% of Apriori’s tokens were claimed by a single clustered group of more than 5,800 wallets.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.