Zeus Capital Report Alleges That ChainLink Is a Scam

News / 17.07.2020

On July 16, 2020, Zeus Capital, a firm that focuses on fund management and independent research, published a paper full of allegations about Chainlink’s credentials and infrastructure. 

The report titled “The Chainlink Fraud Exposed”, describes the token, which is currently in the top 10 by market capitalization, as “the Wirecard of cryptocurrencies”.

Zeus Capital analyzes all aspects of the LINK project and accuses Chainlink of market manipulation through the classic pump and dump schemes

Essentially, these are makeshift transactions aimed at raising the value of the coin to high levels in a bid to show that it is widely traded.

In fact, Zeus alleges that Chainlink execs have a personal reserve of tokens that apparently is being sold via Over the Counter platforms, thus cashing in on current surging LINK prices. 

Moreover, Zeus describes Chainlink’s development team as “very small” and “inexperienced,” asserting that on-chain activity would soon decline, especially with Coinbase and OKCoin both developing their own free oracle. 

LINK broke into new ATH above $5 earlier in July after gaining more than 50% in a single week.

Zeus Capital Attacks Chainlink’s Smart Contract

Another issue analyzed in the paper is related to LINK’s smart contracts that would be controlled centrally, undermining the concept of decentralization itself that they want to solve.

Moreover, Zeus criticized the whole project for still running on the ETH testnet, with the dev team apparently always postponing the launch on the mainnet, adding that even the option of staking LINK token is not yet available.

The report also underlines the characteristics of LINK tokens may prompt the SEC to classify it as security. 

Such a ruling would effectively devastate the entire enterprise and particularly investors because they would find themselves with a practically illegal and unusable token.

The paper then points out that using Chainlink’s oracle could cost users. Internal-developing alternatives such as MakerDAO, UniSwap, and Compound will ultimately render the promise of LINK obsolete.

The report has also looked at the status of LINK’s price. According to Zeus Capital, LINK is largely overvalued, as its intrinsic value is estimated to range between $0.05 to $0.20 at best. 

The authors even go as far as to predict that LINK will plummet from $7.95 to $0.07 over an unidentified timeline, asserting that use cases of Chainlink is slowly decreasing and is currently hosting just 50% of the projects it once had.

Can The Report Be Trusted?

The supposed fund management and independent research startup claim to have offices in New York, London, Singapore, and Hong Kong. 

However, Zeus website doesn’t disclose any staff, and their report offers no authors, and no citations or working links. 

In fact, the firm’s Twitter is currently suspended due to various account violations, and its website was only created in December 2019. 

While you’ll have to form your own opinion on the merits of this report, it’s reasonable to say that its authors’ anonymity is likely to cause some people to believe that it was published maliciously. 

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Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies.