Mystery of Polygon’s missing MATIC: Everyone’s doing it, says ChainArgos

Polygon is facing questions over 400 million MATIC allegedly missing from its staking allocation — but most other projects have also not accurately followed their publicized token distribution strategies, says blockchain data firm ChainArgos.
Jonathan Reiter, CEO of the Singapore-based company, tells Cointelegraph that it has not yet encountered a single company that has fully honored the token distribution plans initially presented to investors.
Making the situation worse for tokenholders, legal experts say the practice probably isn’t illegal in most cases, given that white papers are not accorded the same contractual status as an investment prospectus. Civil action may be a possibility in some cases, however.
ChainArgos is best known for unveilling the mismanagement of Binance USD (BUSD) last year, a stablecoin overseen by Paxos with Binance’s branding. The world’s largest cryptocurrency exchange has admitted that the stablecoin was undercollateralized by more than $1 billion in multiple instances. 

ChainArgos accuses Polygon

ChainArgos has accused Polygon of misappropriating at least 400 million MATIC tokens intended for its staking program in a report. Polygon is an Ethereum scaling network whose native token, MATIC, has the 16th largest market cap worth $7.34 billion, according to CoinGecko.
Polygon launched in 2017 as a proof-of-stake sidechain to help scale Ethereum and is now aggressively expanding into an ecosystem of zero-knowledge-proof solutions. MATIC’s market value was worth $20 billion at its peak.
Polygon states on its website that it set aside 1.2 billion MATIC at launch, or 12% of the 10 billion total supply, for staking rewards. This 12% was to be gradually transferred to the staking address over time, starting with 4%, or 400 million MATIC, during its offering on Binance in April 2019 (an IEO is similar to an initial coin offering but held on an exchange).
Polygon’s project roadmap shared by Binance shows that the 12% MATIC transfer to the staking address should have been finalized by December 2021. But blockchain transactions suggest that hasn’t been the case, as only 790 million MATIC have been transferred from the Polygon Foundation to the staking address.
Polygon’s staking website reports the network has dished out 894 million MATIC in rewards so far — 100 million more than the Polygon Foundation has transferred to the staking address — raising further questions.
Cointelegraph has contacted three Polygon executives and the firm’s press office directly to comment on the allegations. The company has not responded.
In addition to MATIC allocated for staking, Polygon’s token distribution breaks down to 3.80% of the total supply going to private sales, 19% to Binance Launchpad sales, 16% to its team, 4% to advisers, 21.86% to the Polygon Foundation, and 23.33% to ecosystem and marketing.

Enig-MATIC token allocation

Let’s dive deeper on-chain to see what happened.
During deployment in April 2019, the entire MATIC supply was transferred to Polygon’s vesting contract. This address has only sent MATIC to Polygon’s Foundation contract and currently holds over 273 million MATIC.
Blockchain transaction records suggest that Polygon’s token allocations, including transfers to the staking contract, are conducted through its foundation address.
The Polygon Foundation initially received 3.23 billion MATIC (32.3% of the total supply) from the vesting contract in April 2019. From this, 400 million MATIC were sent to an address labeled “Binance 33” on Etherscan.
It subsequently transferred 300 million MATIC to 0x2f4Ee65D536c5a2Dd72004778167B30aeCb8719C (which we will refer to as 0x2f) over multiple transactions. Binance 33, currently the 12th-largest MATIC address with 92 million tokens, almost exclusively transacts with Polygon-related accounts.
Early MATIC transactions confirm 400 million MATIC entering a “Binance 33” wallet soon after launch. The 1.9-billion-MATIC transfer to an unidentified wallet is likely the 19% allocated to Binance Launchpad. (Etherscan)
The foundation address also sent 467 million MATIC to Polygon’s marketing and ecosystem address, which gradually transferred the entirety of this amount to 0x2f. The 767 million MATIC that 0x2f received then flowed to “Binance 14” and “Binance” over time.
While the address lacks a label on blockchain viewers like Etherscan, 0x2f’s transaction history suggests that the account is controlled by, or closely related to, the Polygon Foundation.
If true, this would mean 767 million MATIC from the foundation, which includes 300 million of those allegedly linked to the missing staking tokens, flowed to Binance exchange wallets, raising suspicions that staking rewards were sold by Polygon.
However, it remains possible that the foundation is holding these tokens on the exchange or that it moved the tokens to a separate wallet to transfer the funds to the staking contract.
The Polygon Foundation wallet has moved around 790 million MATIC to the staking contract, with the last transfer of 86.7 million tokens taking place in December 2022. (Etherscan)
In February 2022, 0x2f received 10 million ALPHA ($3.57 million) from Alpha Venture DAO, which was subsequently sent to Binance. A few months later, Alpha and Polygon partnered to launch a Web3 accelerator with a second incubator program soon after.
“Whether they were deposited into the exchange and then withdrawn to a different wallet that also belongs to the staking process, in theory, that’s possible. There’s no way to know if they were sold on Binance,” says Reiter.
Unlike “Binance 33,” which appears to only interact with Polygon and still holds a significant amount of MATIC, “Binance” and “Binance 14” are used to service the exchange’s customers, including Alameda Research, which put almost $17 billion through the address, and Three Arrows Capital, which transacted $7.3 billion, according to Arkham Intelligence.