Justin Sun Adjusts Wallet: LIT Drops 17% Following $152 Million Withdrawal

The market has experienced a sharp change for LIT, the native token of Lighter DEX, which has decreased in value by over 17% this week. The price movement is related to Justin Sun’s decision to withdraw a large sum from the trading platform, raising questions about the stability and depth of the market for this token.

Large Outflows from Lighter DEX Shake Community Trust

Chain analysis data indicates that Justin Sun withdrew over $152 million USD from Lighter’s liquidity pool. This amount accounts for approximately 18% of the platform’s total locked value (TVL). The withdrawal occurred on March 5 during U.S. trading hours.

The sequence of withdrawals shows Justin Sun withdrew $40.76 million USD from Lighter LLP on Thursday. Investors responded to this move with heavy selling, causing LIT to drop from $1.38 to a record low of $0.96 based on current prices.

On-Chain Data Reveals Clear Pattern of Liquidity Drain

Data from analytics platform Artemis confirms the scale of the issue, recording a net outflow of $155.1 million USD in a single day. This is the second-largest daily outflow for Lighter after the drop event on October 10 last year, which saw $179 million USD exit.

Analysis shows that over 90% of all withdrawals were driven by Justin Sun. This has unsettled the community, prompting questions about the motives and implications of this movement.

Justin Sun Clarifies: Wallet Rebalancing for Asset Management

In response to community concerns, Justin Sun stated that the withdrawals are part of a wallet rebalancing strategy. He suggested he will deposit funds back into LLP soon, saying, “We still hold all purchased LIT and remain optimistic about Lighter long-term. We are in the process of rebalancing the wallet and will deposit back into LLP shortly.”

However, uncertainty remains whether this movement is related to the recent SEC fraud case against Justin Sun and his companies.

Liquidity Reduction Impacts Market Stability

Massive withdrawals from the liquidity pool do not indicate platform security issues but significantly affect market structure. As liquidity decreases, market depth diminishes, leading to increased slippage when traders attempt large buy/sell orders.

This means that reduced liquidity makes large trades more susceptible to price volatility.

Whales Continue Holding LIT Despite Lack of Selling

Interestingly, data from Santiment shows that many whales (wallets holding between 1 million and 1 billion LIT) did not change their holdings in March, except on Thursday. This suggests that selling pressure is coming from retail holders and leveraged traders rather than major whales.

Santiment states it is monitoring whether these large holders will re-enter positions during the next price rally, which would be a key indicator for LIT’s recovery.

Final Perspective

LIT’s situation is at a crossroads. The fact that Justin Sun was able to withdraw $152 million while the project continues suggests management issues rather than an emergency. His pledge to deposit funds back will be a decisive factor for the token’s future. Meanwhile, the community will watch whether trust in Lighter’s market will be restored or if deeper skepticism will develop.