What started as a fun experiment of offering cryptocurrency for regular Reddit users has turned into a controversy.
The subreddit r/cryptocurrency has come under fire as many of the moderators have been making large sums of money from the distributed tokens.
This is an issue as it breaks the general rules for Reddit in which moderators should not earn money for their duties.
A few years ago, two subreddits decided to start giving their users tokens for upvotes and posts made to their communities.
These tokens were valueless and were intended for voting and decision-making but when the subreddits enabled the ability to withdraw tokens, users began to trade them on decentralized exchanges.
User u/SectorAltruistic4634 made a post on r/cryptocurrency showing details into how the moderators were taking tokens and cashing them out for profit.
After the post was made, there were many attempts to cover up the details and users were quick to point out that these actions broke Reddit’s terms of service.
Moderators on subreddits generally get a lot of upvotes and karma from their posts. Users are happy to see updates and responses they make to different posts which increases the amount of tokens they receive in each distribution.
Many did not mind the moderators receiving tokens as their duties made them valuable to the community and it would give them more voting power on new propositions.
However, the users did not expect that moderators would be withdrawing these tokens and selling them on decentralized exchanges for profits.
As u/SectorAltruistic4634 pointed out, moderators have sold more $10,000 worth of these tokens and still hold a large enough supply to cash out even more.
Users were angry that these tokens sold on the market were deflating the third-party value of these tokens and upset that they were using their status as moderator to bring in large amounts of the token.
According to the research, each post a moderator made on the subreddit yielded them around $200 worth of the token.
Reddit has yet to comment on the issue and separate subreddits have been created to continue investigating the issue.
This issue could prove to be a larger one as Reddit had toyed with the idea of creating their own token that could be rewarded across multiple subreddits.