⚠️ ZachXBT warns traders to avoid Rain Protocol due to suspicious on-chain links
Renowned on-chain researcher ZachXBT has publicly urged traders to stay away from Rain Protocol ($RAIN), a prediction market project currently valued at $8.8 million despite showing limited real usage and questionable on-chain activity.
In his latest investigation, ZachXBT highlighted several warning signs, including wallets linked to the Rain team that share funding traces with the Data Ownership Protocol (DOP) and TOMI ecosystems, both previously associated with the controversial Israeli entrepreneur Moshe Hogeg.
🔎 Key findings of the investigation
ZachXBT identified specific on-chain evidence: dust transactions sent to the same address from wallets linked to the Rain deployer and the TOMI multisig with only seconds apart.
He also noted that the Rain deployer addresses appeared to be actively operating liquidity pools on Uniswap V3 while routing funds through Gems' hot wallet.
Currently, the project holds $27.2 million in TVL on Arbitrum, almost entirely in its own illiquid token, and generates barely about $1 million in annual fees, a figure significantly lower than established competitors such as Kalshi or Polymarket.
📉 Kraken is downgraded in category
As a direct result of the findings, ZachXBT demoted Kraken from S-tier to B-tier, citing a lack of due diligence in listing low-quality and potentially manipulated tokens, including RAIN.
He also criticized the exchange for how it handled a recent security incident compared to Coinbase and Bybit.
Furthermore, ZachXBT raised the bounty to $100,000 for informants who can provide documents or chat logs related to manipulation schemes involving centralized exchanges.
📋 In summary
ZachXBT has issued a strong public warning against Rain Protocol, pointing out suspicious on-chain connections and a disproportionately high valuation relative to its real usage.
The investigation also led to Kraken being downgraded from S-tier to B-tier.
The case highlights existing concerns about due diligence in the prediction market sector and the importance of on-chain transparency when evaluating large-cap projects.
⚠️ Important notice
This information is based on ZachXBT's public investigation and on-chain data as of June 5, 2026. It does not constitute financial advice or an investment recommendation. Always conduct your own research before making any decisions.
