Basis Markets Investigation — Part 3 — Blockchain — NFT capital raise

32,000 SOL raised. Where did it all go?

12 min readMay 31, 2023

NFT Solana Capital Raise Exec Summary

Between Nov 9th and Nov 15th, 2021, Basis Markets raised 32,000 SOL from the sale of 4,000 NFTs at 8 SOL each. All 32,000 SOL were collected in a single Basis Markets solana wallet (3h8c), and rather than transferring them in one large block to either a CEX or DEX wallet, the funds were split in a very precise arrangement, and distributed to the founders in line with a 51/20/10/7/7/5 ratio. It appears that 100% of the capital raise was distributed to founder’s personal wallets with 0% appearing to have been retained as ‘project funds’ or ‘treasury’.

This 51/20/10/7/7/5 ratio is the same one used for distribution of the Founder’s NFTs, with Traderskew receiving 510, Andreas 200, DeltaOneDennis 100, Cryptoboole 70, TedTalksMacro 70 and Comguito 50. This distribution of NFTs and raised capital appears to reflect an agreement amongst the founders as to effectively an equity and revenue / yield split, with TraderSkew taking the lion’s share.

The pre-sale occurred on Nov 9th, raising 24,048 SOL, with the final sale at 18:04pm. 18 minutes later, the team appear to have done the maths and set up the distribution procedure. At 18:22pm, the process of distributing the raised SOL started, concluding 16 minutes later, with all 24,048 SOL distributed in a very precise ratio of 51% to TraderSkew, 20% to Andreas, 10% to DeltaOneDennis, 7% each to TedTalksMacro and Cryptoboole, and 5% to Comguito.

After the public sale concluded on 15th November, 2021, a similar distribution procedure was set up to ensure that founders received the full 32,000 SOL in 51/20/10/7/7/5 ratios. Below, we will outline why we believe that these were personal wallets, not project wallets.

From the evidence presented below, we believe it is reasonable to conclude that the founders paid themselves 100% of the proceeds of the capital raise in a predetermined split. They paid themselves IN FULL less than half an hour after concluding the capital raise, appearing to leave zero dedicated project funds in control of a Basis Markets legal entity for the execution of the project roadmap, and before delivering ANY of the functionality that they had promised.

Why the NFT raise? What was promised?

Welcome to Part 3 of our investigation in Basis Markets. This part will be the first one to do a deep dive on the blockchain evidence of how the Basis Markets team used the raised capital from their NFT capital raise.

The first capital raise occurred on November 9th (presale) and November 15th (public sale). This occurred after 2 YouTube streams which outlined the objectives of the raise. The roadmap was split into two streams, the NFT holder left side, and the DAO / DBLP right hand side. The right hand side representing the DBLP had some projections on TVL. The YouTube streams described the core base case scenario of a DBLP Total Value Locked (TVL) of $100M USD, with an expected APR of 100% per annum. Based on these core assumptions, with a 16% profit fee to be distributed to NFT holders as yield, the scenario presented was of each NFT yielding $61.44 per week. Based on this scenario, the NFT purchased for $1880 was projected to yield $3194.88 per annum. As TraderSkew states in the quick clip below from Townhall 2: “So if you buy something for, what is it, two thousand bucks, and it is going to yield you three thousand two hundred dollars in the first year”.

Townhall 2 — NFT costs 2000, “is going to yield you 3200 dollars” in the first year

The first Capital Raise involved the sale of NFTs (“utility” NFTs, not jpegs) in mid-November 2021 and raised about $7–7.5M USD worth of SOL. 4000 NFTs were sold to the public at a price of 8 SOL, for a total of 32,000 SOL received. The SOL price over that week was in the $220–$250 range.

The founders received 20%, or 1000 NFTs, between them. It wasn’t until much later that the community found out how those NFTs were split. TraderSkew received 510 NFTs of the available 1000 founder NFTs, but then passed 10 of them on to a mystery founder (more on this later). Andreas received 200 NFTs. DeltaOneDennis received 100. CryptoBoole received 70. TedTalksMacro received 70. Comguito received 50. Euan (or ‘anon’ as he is known in the TSOG discord) is apparently not considered a ‘founder’, although he was on the founding team on the Basis Markets website (webpage now deleted).

Basis Markets team of founders with >80 years combined experience

https://web.archive.org/web/20211115173713/http://basis.markets/team

The NFT sale was split into 2 tranches. It was supposed to be 1000 for presale on Nov 9th (primarily intended for the Lambda Strike and TraderSkew OG discord communities to have a chance at early access), with 3000 held back for public sale on Nov 15th, 2021. What happened was that there were technical difficulties on the presale, and despite saying in advance that solana would be able to handle the transaction volume and their website built by Boole and Andreas was rock solid, the deposit / purchase mechanism did not work as advertised. It took about half an hour to get it working properly, and then after delaying the presale by 30–60 mins, the team decided to increase the initial presale allocation from 1000 to about 3000, with final figure being 3006 sold at 8 SOL (for a total in presale of 24,048 SOL), leaving 994 NFTs for the public sale.

If you look at the Basis Markets 3h8c wallet which was the wallet used for the NFT presale and public sale, it is possible to verify that a total of 32,000 SOL was indeed received into the wallet over the period of Nov 9th — Nov 15th. A little extra was received during the public sale as the solana blockchain appeared to process deposits faster than the Basis Markets website could close sales. As such, some SOL had to be refunded to potential NFT purchasers who were “too late”.

If we look at the 3h8c wallet on Solscan, it is possible to view all the deposits of SOL as well as the withdrawals. Halfway through the >2000 or so transactions, it is possible to see the presale concluding. The last deposit to the presale appears to have occurred at 18:04pm UTC (1 hour and 4 minutes after start, and 57 minutes after the first deposit was received into the wallet.

Source: https://solscan.io/account/3h8c3ZZj6YYUeK4QEkmy5a9GR8CkXpJodFovyhvQebzY#solTransfers

18 minutes after concluding the presale, it appears that the team has done the calculations on how to split the funds, and started transferring the SOL proceeds to PERSONAL wallets. And a further 16 minutes later, the distribution was complete.

Distribution of the SOL raised from NFT sales. All done in 34 minutes after last SOL received

If you would like to verify the blockchain transactions the large transactions from the image above, below are the 6 founders receiving their first large SOL distribution from the above image.

TraderSkew (12,264.48 SOL): https://solscan.io/tx/4jKc5pj6vneVy1xmLJ4DG7ttmMcbNFaJdqXBuYtn2NtdAPWswb8FBVeD2Hwv1x86q76g1UQPhX6Fp4oJW1BVUiRU

Andreas (4808.6 SOL): https://solscan.io/tx/2Y85n2V1JKM2C7uTpL8jAi2fmF3SqgUHEqirEMVccp4gmZ6JXMrJKBCG6PfG88q7uqQxYY4MCJ4J2pV9PdJPpbXZ

CryptoBoole (1682.36 SOL): https://solscan.io/tx/3u8Pp83hDwGH79XNXod7rqkZd43PDeegTGC1YWckykv8gaSKSxMVR7u5pYUUASApvvAFeGquAPHUWYntvhQBZRU5

TedTalksMacro (1682.36 SOL): https://solscan.io/tx/cZ9WYdcBH2HvECFyGTjDu9rDNNj8qKpLjfCJijKfZkNJGoXx6R31CjrPVnu1BoEj4UUNKgRv6M7H64kWchHKF9u

DeltaOneDennis (2403.8 SOL): https://solscan.io/tx/5B2Ety1ERvzyGNbpq11Y75JZ5XQ6YEcrkRRdcx3qs5cg7FHK2suEWu4SrFYeGHLEL2Livkp8dMNEnf2atHV4moGL

Comguito (1202.4 SOL): https://solscan.io/tx/3MVT4Y1EYRi3Uswwi7GuqixnEFpMTxHgXXjEyBng5k3cSCftkx74Bik8VRaLh2HGRmdQEQZem93QYabssfsxnyT8

This first tranche of SOL sent to the founders is done in a pre-defined split that reflects their pre-agreed “share” of the proceeds. There are 5 check transactions of 1 SOL to 5 of the 6 founders. Apparently TraderSkew did not need to confirm his own TraderSkew.sol wallet 8eDH was active.

After the test transactions, the 24,048 SOL from the sale of 3006 NFTs were distributed to 6 wallets.

- TraderSkew received EXACTLY 51% at 12,264.48 SOL.

- Andreas received EXACTLY 20% at 4809.6 SOL.

- DeltaOneDennis received EXACTLY10% at 2404.8 SOL.

- Ted and Boole both received EXACTLY 7% at 1683.6 SOL each.

- Comguito received EXACTLY 5% at 1202.4 SOL.

The total period of distribution of the 24,048 SOL raised capital to personal wallets controlled by individual founders took 16 minutes, slightly shorter than the length of time that it took them to close the presale, do the calculation on how to split the raised SOL, and set up the procedure for distributing it to personal wallets.

At the end of the Public sale, after a further 994 NFT’s had been sold and excess SOL returned to “unlucky” potential NFT holders, the remainder of the SOL was finished being distributed to the same personal founder wallets. As per the image below, the ratio in which the SOL was distributed remained unchanged. TraderSkew received the lion’s share at 51%, and it looks like TedTalksMacro got shortchanged and had to take a haircut for all the Solana transaction fees, only receiving 6.998% rather than 7%.

Distribution of the completed capital raise of 32,000 SOL to founder wallets

Source: https://explorer.bitquery.io/solana/address/3h8c3ZZj6YYUeK4QEkmy5a9GR8CkXpJodFovyhvQebzY/money_flow?from=2021-11-09&till=2021-11-15

And thus, the 32,000 SOL was distributed. Did it go to a Basis Markets wallet so that the core team could build out all of the necessary elements to support a 2-sided roadmap, which includes executing basis trades on a DBLP with projected TVL of $100M USD?

No, it appears to all intensive purposes as if the team paid themselves 100% of the proceeds of the capital raise in a predetermined split before delivering ANY functionality. They appear to have paid themselves IN FULL less than half an hour after concluding the capital raise, appearing to leave zero dedicated funds in control of a Basis Markets “legal entity” for the execution of the project roadmap. It is unclear how the project was intending to pay for things like legal advice on whether Basis Markets should register with the SEC as a registered security, or pay for things like server hosting and other budget line items going forward.

There remains a very small possibility that the team will argue that this precise split of funds (51%, 20%, 10%, 7%, 7%, and 5%) was just a mechanism to make sure that funds were securely transferred from the IDO wallet into the eventual Basis Markets wallet. This might be possible to be argued if all funds were quickly consolidated back the same wallet, whether on a CEX or a DEX. Following the trail of the SOL distribution out beyond the 1 step move to the founder’s personal wallets, it is clear that a couple of the founders move the funds immediately to FTX (Cryptoboole and Comguito), however several of them do not.

DeltaOneDennis keeps the SOL on-chain for an extended amount of time, swapping it into various forms through stable pools, Andreas sends out his SOL to 2 different CEXs (FTX and Kraken), and TraderSkew moves his through his DLAB wallet which was the primary wallet for his pre-existing TraderSkew.com website, which existed before Basis Markets.

TedTalksMacro SOL distribution

Let’s have a closer look at what TedTalksMacro does with the SOL he received. Ted sends his SOL to 4 different CEXs (FTX, Binance, Kucoin and a 4th as-yet unidentified CEX hot wallet) via multiple fresh burner wallets.

TedTalksMacro’s SOL distribution. Into 4 separate CEXs, and some back out to DEX wallets, and sold for USDC

TedTalksMacro’s wallet sends the SOL to 4 separate CEX’s after receipt on November 9, with the last transfer to CEX occurring at 21:36pm on Nov 10, with 438 SOL sent to FTX. About 4.5 hours later at 2:24am on Nov 11, 450 SOL are sent back out from FTX to wallet EEje, which are then split into two tranches of 350 and 100.9 SOL and sent back to wallet 3y5i (the original Ted wallet that received SOL in the first place). At 08:09am, the 100.9 SOL is sent to 3y5i, followed very shortly thereafter by a transfer of 529.99 SOL from a second CEX (wallet 5sbB). Between 8:02am and 8:24am, around 1,000 SOL are transferred to Mango Markets in 5 transactions, which are “settled” for 237k USDC at 08:27am, three minutes after the last sale.

From there the 237k USDC is sent BACK to EEje 1 minute later at 08:28, and then 17 minutes later 137k of that 237k is transferred to wallet 6xUB. The remaining 100k is split, with 50k swapped for Orca tokens, and 45k sent to yet another Ted wallet 4jB2. Nothing here seems consistent with the idea that the SOL was used as “project funds”. Everything here seems consistent with the SOL having been transferred to personal wallets of the founders, with lots of small transactions and recirculation through CEX and DEX wallets.

DeltaOneDennis SOL Distribution

In a similar vein, if we look a little more closely at how DeltaOneDennis approaches the distribution of the 3,200 SOL he received into his C2Ag wallet over the course of Nov 9–15, we can see that there is no activity for a week, and then almost all of the activity occurs on Nov 16th, concluding with a final transaction at 01:19am on November 17th.

1,200 of the SOL is moved from Dennis’s C2Ag wallet through an intermediary burner wallet BoD6, and then on to the Bybit exchange in parcels of 100 SOL, and 3 parcels of 400 SOL. The BoD6 wallet appears to have no other function other than as a transit intermediary on the way to Bybit.

The remaining 2,000 SOL is moved from DeltaOneDennis’s C2Ag wallet to DeltaOneDennis’s 9rTN wallet starting with 400 SOL at 9:33am on the 16th November. There are attempts to sell the SOL for USDC with limit orders on Serum Dex, but there is only one real transaction that settles, with transaction settling at 11:28am for 26.8k USDC. Thereafter, there are no more attempts to use limit orders to sell the SOL, instead the action occurs on Jupiter Aggregator, where there are multiple swaps of SOL for USDC in increments of 50 SOL, 100 SOL and 200 SOL.

We have documented 25 swaps of SOL for USDC in DeltaOneDennis’s 9rTN wallet, with USDC proceeds being sent out from 9rTN to BsN6. On Nov 16th, around 445k USDC are sent from 9rTN to BsN6, and almost all of it is swapped for ATLAS, POLIS and Serum tokens. This behavior in swapping half the SOL for USDC in multiple small transactions (10–40k USDC worth each) does not seem consistent with the idea that the SOL was distributed to a BASIS MARKETS wallet, but instead the activity was likely done in a personal wallet by a founder. Likewise, the transfer of USDC proceeds to a second fresh wallet (BsN6) which had just received 1 SOL to initialise it from the 9rTN wallet, and then swap the USDC proceeds for ATLAS / POLIS / Serum altcoins seems entirely inconsistent with using the raised capital for Basis Markets project activities.

Complete blockchain evidence for SOL distribution

For those interested in reviewing and verifying the raw blockchain evidence for these transactions, the below PDF has all of the SOLSCAN links for all of the transactions showing how the SOL was distributed. If you click on an underlined link, it will take you to the Solscan transaction for verification.

Basis Markets - Capital Raises - NFT raise SOL distribution.pdf

Basis Markets - Capital Raises Basis Markets NFT sale 3h8c - presale account TraderSkew - 16,320 SOL - 51% Transfer…

www.slideshare.net

As part of the NFT capital raise, the founders received 20% of the 5,000 NFTs minted. Shortly after the public sale was concluded, a tree-map was produced by the team which showed the distribution of the NFTs. We have taken the liberty of adding some founder headshots to the treemap. As can be seen, TraderSkew had 500 NFTs (50% of the founder allocation) in his TraderSkew.sol 8eDH wallet. Andreas had 200 NFTs (20%) in his 2mEv wallet, DeltaOneDennis had 100 NFTs (10%) in his GNnY wallet, TedTalksMacro had 70 NFTs (7%) in his 7vSa wallet, Cryptoboole had 70 NFTs (7%) in his 2yEY wallet, and Comguito had 50 NFTs (5%) in his HmdP wallet.

Source: https://web.archive.org/web/20211211205254/https:/twitter.com/basismarkets/status/1469747233474154508

This almost lines up perfectly with how the SOL was distributed, with the minor exception that 1% is missing. Mystery founder 7 is the holder of 10 NFTs in wallet DAvo, signifed with the question mark in the image above. The 1% (10 NFTs) were transferred from TraderSkew.sol 8eDH wallet to the DAvo wallet on November 29th, 2021. Transaction for one of the 10 NFTs transferred is below.

https://solscan.io/tx/39yrLYrP3sFJNEhFmK8u1CSWLarfs56Rp1LxJCG7MMh5zPLEaegf1srBaeuQJ8XkbNB5x9Sno2RmtmLgDqdeYb3i

So, who is this mystery founder #7? Sorry, you’re just going to have to wait a little longer. Next up in Part 4 — Blockchain — $BASIS IDO — how was $20.725M split? we will examine what happened to the $20.7M USDC raised in the $BASIS token IDO.

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