Sahara AI denies insider sales after SAHARA token crash

SAHARA token declined by almost 60% within several hours on June 9. This comes in over investors’ concerns around insider selling following an increase in massive token transactions on-chain. The token dropped to as low as $0.07 at one point. Such an event took place at the height of the trend of deleveraging in the cryptocurrency market. 

Sahara AI in an X post stated that it had observed “unusual $SAHARA market volatility”. However, the firm did not find any issues concerning the token’s contract or protocol infrastructure. Furthermore, the company issued another announcement denying any sale of tokens into the market by insiders.

“Team and investor wallet allocations are fully untouched on-chain,” Sahara AI wrote, adding that “no team or investor tokens have been sold or moved.”

Bridge-liquidity transfers appear to have triggered the selloff

According to Sahara AI, the transactions that sparked market panic were related to a pre-scheduled liquidity provisioning activity for the new cross-chain bridge built using Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

In particular, the company noted that 600 million SAHARA tokens had been transferred to provide liquidity on the newly created bridge between Ethereum and the BNB chain, with another 150 million tokens remaining for future liquidity operations. Sahara AI’s Chainlink-protected cross-chain bridge was deployed on June 4.

No independent confirmation of the mentioned wallet addresses, contracts, and transaction hashes was provided. Nevertheless, the date of the transactions corresponded to increased attention paid by traders to treasuries and ecosystem wallet addresses amid the release of Sahara AI’s multi-chain bridge technology infrastructure.

That distinction matters structurally.

In a conventional token sale, massive transactions tend to make their way into the deposit wallets of centralized exchanges prior to market sales. In the case of bridge-liquidity transactions, however, these tend to be transactions whereby tokens get moved into a liquidity system controlled by smart contracts, allowing for swapping or bridging of assets from chain to chain. Those transactions can still appear alarming on-chain because they involve unusually large token movements into previously unfamiliar addresses.

Why CCIP bridge mechanics can resemble insider dumping

The Chainlink CCIP framework connects blockchains to each other using verified cross-chain infrastructure providers’ networks to transfer assets and messages. With regard to the Sahara AI bridge, it allows users to transfer their SAHARA assets between Ethereum and BNB Chain using the Chainlink CCIP solution, without relying on wrapped assets issued by third-party bridges.

Cross-chain bridges usually need a large number of tokens available in both chains for immediate bridging of the asset. This is why projects always load hundreds of millions of tokens into the bridge contract right off the bat.

However, from a structural market standpoint, this creates negative optics.

Transfers of considerable amounts of money to new wallets regularly activate automatic whale tracking alerts on X, Telegram, Arkham, and exchanges monitoring systems. In moments of low liquidity, traders usually respond before establishing whether the recipient wallet is linked to an exchange, market makers, bridge contracts, or treasuries.

This produces a vicious cycle:

• Large treasury transfer detected
• Traders assume insider distribution
• Faster spot selling
• Funding rate becomes negative
• More liquidations leading to volatility

This seems to have happened in SAHARA on June 9.

Market stress likely amplified the collapse

The crash took place during a volatile period for crypto-risk assets. From June 4 to 6, there was a series of leveraged liquidations within the crypto market, amounting to more than $5.4 billion according to CoinGlass derivatives data mentioned by CoinMarketCap.

SAHARA is one crypto asset that could be traded as a momentum-driven AI-based token, having a substantial amount of retail investors, particularly due to the high demand for growth and development in the ecosystem, as well as its bridging. This made the token more vulnerable to panic once rumors about the on-chain transfers started going around.

The example also illustrates an emerging issue for the relatively new AI-based crypto tokens, whereby regular operations in the backend of infrastructure can very quickly be seen as exit liquidity events in speculatively-minded markets that suffer from treasury transparency issues.

Upcoming unlock could become the next pressure point

Attention is now shifting toward Sahara AI’s next scheduled token unlock event.

According to Tokenomist unlock tracking data, approximately 1.03 billion SAHARA tokens are scheduled to unlock on June 26 as part of the project’s broader vesting schedule.

As of June 9, roughly 34% of the total SAHARA supply was already unlocked, according to Tokenomist estimates.  The upcoming release could become a critical market test for the project.

In light of Sahara AI’s claim that the June 9 transactions have been purely liquidity bridge-related, the sell-off could one day be interpreted as an overreaction of the market structure, further exacerbated by low liquidity and liquidation dynamics. However, assuming questions remain open on treasury management practices, the upcoming June 26 unlock event could reignite fears surrounding circulating supply growth and insider distribution risk.

For now, Sahara AI says it is continuing its internal investigation into the volatility event and plans to release additional information once “verifiable information becomes available.”

The smartest crypto minds already read our newsletter. Want in? Join them.