24 Hours of Trust Collapse: A Full Analysis of the Limitless TGE Controversy

Limitless Labs (LMTS) is a decentralized prediction market platform built on the Base chain. The project received significant attention early on, completing a $10 million seed round led by 1 confirmation, with notable investors including DCG, Coinbase Ventures, and F-Prime. However, on October 22, 2025, when the LMTS token officially launched (TGE), large on-chain transfers, intense market fluctuations, and vague explanations from the team made this TGE a hot topic in the crypto community.

1. Event Review

On October 22, 2025, Limitless completed its TGE on the Base chain, and the LMTS token officially went live. However, shortly after the TGE, large token transfers and dumps appeared on-chain. Some KOLs pointed out that the Limitless team transferred 5 million LMTS to a wallet and quickly dumped them, making approximately $2.3 million in profit. Subsequently, another 10 million tokens were transferred into an address and immediately sold off, causing severe market volatility and community panic.

In response to the doubts, founder CJ explained that these addresses were used for anti-sniping bots, specifically the “Banana Gun” mechanism, designed to prevent automated front-running and protect ordinary investors. However, since the team did not disclose this operational strategy in advance nor clarify the management of funds, the explanation did little to dispel suspicion. Even if the intent was not malicious, in a market lacking transparency and trust, vague explanations alone can trigger a collapse in confidence.

2. Mechanism and Operational Analysis: What is the “Banana Gun Address”?

In the decentralized world, TGEs often become targets for sniping bots. These bots can automatically purchase tokens immediately upon launch, leveraging high-speed block monitoring and scripting efficiency to profit before ordinary users can even click. Such automated front-running often causes prices to spike instantly and fluctuate wildly, making it nearly impossible for retail investors to participate.

To counter this, some projects introduce “anti-sniping mechanisms,” including delaying transaction start times, releasing tokens in batches, setting whitelists, or using specific “protective addresses” to execute strategies. The “Banana Gun Address” mentioned by Limitless is a representative of such mechanisms. Originally, Banana Gun is a widely used automated trading tool in the Ethereum and related ecosystems, used for rapid buying, selling, or sniping newly launched tokens. Some project teams utilize its automation features to set a “sniping address” to control initial liquidity or prevent external bots from over-intervening in the market. Theoretically, this approach aims to let the official use automated scripts to “guard” the token price and ensure initial market stability.

However, the issue with Limitless is that this “Banana Gun Address” is controlled by the team itself and was not disclosed to the community beforehand. When this address transferred and dumped tens of millions of LMTS tokens shortly after the TGE, the market naturally interpreted this behavior as official dumping. Although CJ clarified on X that the address was used for anti-sniping rather than dumping, the lack of prior disclosure and third-party audits made the explanation seem weak.

3. Market Reaction: Price Fluctuations and Community Sentiment

According to CoinMarketCap data, LMTS surged initially after launch but then dropped over 60%, with liquidity sharply decreasing. Community confidence collapsed quickly, and debates erupted on social platforms. Some investors believed that the team was using “anti-sniping” as a cover for large-scale fund operations, blurring the boundaries of internal actions; others pointed out that the project’s PR pace and information disclosure were too delayed, amplifying market panic.

For investors, if these wallets are tools for anti-sniping, there must be clear rules and prior announcements; otherwise, ordinary users might still be shaken out during price swings. Currently, on-chain data has not fully verified CJ’s claims, and token transfer and transaction details lack transparency. Even if the team claims to have mechanisms to protect retail investors, market trust depends on whether operations are fair and verifiable. In the decentralized world, social media opinion effects can be especially damaging. Once trust is questioned, the market no longer needs the truth to price assets. During high-profile events like TGE, delayed communication and vague responses can be more damaging to reputation than the “misbehavior” itself.

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Figure 1. LMTS token price. Source:

4. Risks in the Limitless TGE Model

The Limitless incident once again highlights the hidden risks of the “Token Generation Event” (TGE) model. This issuance method, once regarded as open, fair, and transparent, has revealed many vulnerabilities in practice.

Information Asymmetry Between Team and Market

The original intent of TGE is to allow more people to participate fairly in early-stage projects, but in reality, the team and early participants often possess far more information and favorable pricing than ordinary users. They have advance knowledge of the issuance schedule, initial prices, and token distribution strategies, enabling project insiders or internal parties to “control the market” at critical moments, leaving retail investors as the last to buy in.

Lack of Lock-up Mechanisms and Transparent Address Management

In the Limitless case, the team’s wallets’ frequent transfers and unclear operations triggered market panic. The absence of clear lock-up mechanisms and explanations of address purposes made it difficult to determine the true whereabouts of these funds. This opacity not only damages market trust but also renders the original goal of “public issuance” meaningless.

Automated Sniping Risks

In DeFi, sniping bots are almost standard for TGE, but if these bots are controlled by the project or insiders, fairness is completely lost. Retail investors scramble to buy, only to find that all available quotas are snatched up within a second by official bots. This game turns the “open and fair” issuance into a scripted performance.

Disconnect Between Investor Education and Project Transparency

Most retail investors lack understanding of on-chain fund flows and find it difficult to verify the true use of project funds via blockchain explorers. In such an information asymmetry, they are more easily influenced by social media sentiment and KOL opinions, leading to herd behavior and potential losses.

5. Structural Dilemma: Trust Challenges in Prediction Markets

The trust crisis at Limitless also exposes the structural challenges of the prediction market sector. Prediction markets are essentially a form of financial derivatives, highly dependent on liquidity and participation confidence. When market enthusiasm wanes or liquidity dries up, project tokens can easily become speculative assets rather than reflecting true value. The sharp price fluctuations of LMTS demonstrate that mechanism innovation alone cannot fully bridge the trust gap. The fairness and decentralization of prediction markets, if lacking institutional support, can easily be suspected of being “another centralized market maker game.” Projects operating in regulatory gray areas need to establish higher standards in information disclosure, fund custody, and governance transparency.

6. Conclusion

The Limitless incident once again proves that in an era of “on-chain transparency,” transparency does not equal trust. Without institutional constraints and behavioral norms, so-called public issuance can still turn into an insider game.

TGE is undoubtedly an important tool for new project fundraising and community building, allowing more people to participate in early innovation. But when mechanisms lack constraints, funds flow are opaque, and project responsibilities are ambiguous, this model poses significant risks to users. Therefore, the TGE process should also be on-chain verifiable: token distribution, lock-up positions, and liquidity arrangements should be made public. Exchanges or launchpads can introduce third-party audits and fund segregation mechanisms to prevent funds from being privately manipulated or dumped prematurely.

True trust should be built on clear rules, effective constraints, and balanced rights and responsibilities. Project teams need to disclose information and fulfill commitments; platforms should conduct strict audits and assume risk control responsibilities; investors must develop independent judgment and learn to identify risk signals rather than blindly follow emotions or KOLs.