Blockchain investigator ZachXBT has issued a strong warning to cryptocurrency traders, urging them to avoid Rain Protocol after uncovering what he describes as a series of troubling on chain connections and suspicious trading patterns tied to the project.
In a recent report, the well known crypto sleuth criticized Rain Protocol, a prediction market platform with a reported market capitalization of $8.8 billion and a position among the top 15 digital assets by value. According to ZachXBT, the project has limited user adoption, weak product traction, no prominent investors backing it, and a team with little proven experience in the cryptocurrency sector.
Alleged Connections to Previous Crypto Ventures
According to his investigation, wallets associated with the RAIN team appear to share funding paths with both the Data Ownership Protocol (DOP) and TOMI ecosystems. These connections were reportedly identified through transactions involving the Gems hot wallet and several centralized exchange deposit addresses, suggesting a possible relationship between the projects.
As part of his evidence, ZachXBT pointed to two small “dust” transactions sent to the same wallet address on October 14, 2025. He claimed that a wallet linked to the RAIN deployer sent a transaction to the address at 3:31:47 p.m. UTC, while another wallet allegedly connected to the TOMI team multisignature wallet and a centralized exchange deposit address sent a similar transfer just 36 seconds earlier.
He further noted that the recipient address later received funds from another wallet that had previously been funded by a DOP multisignature wallet. In a separate transaction chain, ZachXBT claimed another address transferred funds to a wallet that later interacted with the same centralized exchange deposit address used by the DOP deployer.
Concerns Over Valuation and Market Activity
Beyond the wallet connections, ZachXBT alleged that Rain Protocol’s market activity displays signs of price manipulation. He claimed that wallets linked to the project’s deployer made use of Uniswap V3 liquidity pools while routing spot transactions through the Gems hot wallet.
The investigator also questioned the project’s valuation and growth narrative. He highlighted the fact that Enlivex, a Nasdaq listed company and Rain’s decentralized autonomous treasury, announced a $212 million treasury strategy in November 2025 despite what he views as a relatively small ecosystem compared to established prediction market platforms such as Kalshi and Polymarket.
Referencing data from DefiLlama, ZachXBT noted that Rain Protocol currently holds approximately $27.2 million in total value locked on Arbitrum. However, he argued that the entire amount consists of the project’s own illiquid token and that the protocol generates only around $1 million in annual fees.
He also pointed out that TOMI, DOP, and Sirin Labs have all been linked to Israeli entrepreneur Moshe Hogeg, who was arrested in 2021 and later became the subject of police allegations involving a $290 million cryptocurrency fraud investigation.
Kraken Downgraded Over Listing Practices
As part of his broader criticism, ZachXBT announced that he had reduced his rating for Kraken from S tier to B tier, citing what he described as insufficient due diligence before listing tokens he believes are low quality or potentially manipulated, including M, RAIN, RIVER, and RAVE.
He also criticized the exchange’s handling of a recent security incident, arguing that Kraken’s public disclosure did not address compensation for affected users.
In contrast, ZachXBT praised exchanges such as Coinbase and Bybit for prioritizing customer reimbursement following their own security breaches.
To support further investigations, ZachXBT announced that he has increased his whistleblower bounty to as much as $100,000 for insiders willing to provide documents, communications, or chat logs related to alleged market manipulation activities involving centralized cryptocurrency exchanges.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
