Avalanche News: Allegations of Centralization Raised by Crypto Leaks – Is AVAX at Risk?

• Allegations of centralization could pose legal and security risks for Avalanche, potentially classifying AVAX as a security and impacting its future adoption.
• The report highlights Ava Labs’ control over validating nodes and AVAX tokens, raising concerns about the network’s decentralization and vulnerability.

Amid recent developments, the Avalanche Foundation reacquired 1.97 million AVAX tokens from the LFG deal, as reported by CNF. However, Avalanche now faces scrutiny after Crypto Leaks published file number 11, raising concerns over the network’s centralization.

According to a recent tweet from community member, Paisan, stating that incredible fireside chat with Avalanche CEO.

Incredible fireside chat with Avalanche CEO @el33th4xor!

Alpha was dropped, knowledge was learnt.

Moral of the story, web3 gaming is inevitable pic.twitter.com/FYCL2XoOES

— Paisan (@RealPaisanTPK) October 16, 2024

The report also alleges that Ava Labs, the company behind Avalanche, holds significant control over the network. It claims Ava Labs runs a substantial number of validating nodes, is the primary recipient of validator fees, and controls a large portion of the AVAX token supply.

Additionally, the report notes that CEO Emin Gün Sirer spent six months in Turkey and was often unreachable, raising concerns about the network’s leadership.

Ava Labs’ senior engineer, Fabio Barone, stated that the organization’s leadership, including COO Kevin Sekniqi and President John Wu, has overlooked the network’s centralization. Barone claims AVAX tokens from the company’s treasury have been used to increase the number of validating nodes, benefiting insiders and venture capitalists financially.

Is AVAX at Risk?: Potential Risks on Price and Allegations

The centralization allegations pose several risks for Avalanche and its native token, AVAX. If proven, the network could face classification as a security in the U.S. and EU, which would impact its adoption and long-term viability. The report also suggests that centralization makes the network less secure than other decentralized blockchains, leaving it vulnerable to price manipulation.

According to CoinMarketCap data, Avalanche (AVAX) is trading at $27.63, down 1.08% in the past day but up 6.81% in the past week.

Beyond the core allegations, Crypto Leaks highlights other issues, including the $3 million Stars Arena hack and Dwight Howard’s association with the network. Additionally, claims have surfaced that Avalanche’s partnership with Sports Illustrated was driven more by marketing than ticket sales through the network. These broader concerns have fueled calls for Ava Labs to address growing unease within the community.