Arc blockchain by Circle: four days after launch, half of its DEX volume was fake, and two wallets made it

01 — The headline numberDay five looked like a recovery

Arc is the blockchain built by Circle, the company behind USDC. USDC pays the gas, and the pitch is payments and foreign exchange. It opened to the public on September 16. Like every new chain, it opened to a rush of airdrop hunters, NFT mints and memecoins, and then the rush thinned out.

By the fifth day most measures were sliding. Transactions were down. Active wallets were down. One number was holding up: DEX volume, the dollar value of swaps on the chain's exchanges, measured here on the USDC side of each trade.

Wallets fell by more than a third in a day while trading went up. Those two facts do not sit well together, so we split the volume by token.

02 — The splitTwo tokens, minted the night before

The top of the list for September 20 was not cirBTC, or the Argus launchpad token, or any memecoin with a crowd behind it. It was two contracts that did not exist a day earlier.

Both new tokens share a name and a ticker with a token people on Arc already trade. We will call them the Argus-named token and the WETH-named token. We found nothing on-chain that ties either one to the Argus launchpad or to any bridge, and we are not saying anyone at those projects made them.

Both also trade at a price that looks right. The WETH-named token changed hands at about the same dollar price as bridged WETH. The Argus-named token sat at about 1.8 cents, where the launchpad's ARGUS was trading. A screener that sorts by volume and shows a ticker would put both at the top of Arc, with a believable price next to each.

Over the two days they existed, the pair added up to a large slice of the whole chain.

The last column is the one that matters. Without the pair, trading on Arc fell by a quarter between the two days, in step with everything else on the chain.

03 — The five transactionsTwenty buys, twenty sells, one signature

Almost all of that volume sits in five txs. One wallet signed the three in the WETH-named token. A second wallet signed the two in the Argus-named token.

Wallet A is 0x3f5d6d4a48540fed25d1aa9b63fe55adb25d7dbe. Wallet B is 0x32277a261397cdbfc890d995040910f9b4d7a299. A buy and a sell each count as one swap, so a transaction with ten of each holds twenty. Volume counted is the USDC side of every swap added together, which is how a volume table reads it.

Every one of the five has the same number of buys as sells. In the three largest, each swap is worth roughly half a million dollars. The last two landed less than three minutes apart and match each other to within about $2,000.

Everything else these two wallets did in the two tokens, seventeen more txs, comes to a few hundred dollars. Every other wallet that traded either token, fourteen of them by our cutoff, adds up to about seven hundred dollars. The five txs are the market.

04 — The money$59.8 million of trades from a $5,200 balance

Swapping half a million dollars forty times over should take a lot of money. These wallets do not have it.

How does a wallet with five thousand dollars print twenty million in one tx? Both tokens trade on Uniswap v4, and v4 keeps a running tab. Inside one tx a trader can buy and sell as often as they like, and the pool only asks them to settle the net difference at the end. Buy half a million of a token, sell it straight back, and the amount owed at the end is close to zero. Do that twenty times and an indexer records forty swaps of half a million each.

The pool's own records show one more step. Uniswap v4 logs every change to a pool's liquidity, the money traders swap against. In all five transactions, the contract the wallet called first added liquidity to the pool. Then it made every swap. Then it removed exactly the same liquidity, still inside the same transaction. Between 95% and 100% of the money each one traded against was its own, and Wallet A had added the rest through other contracts. Until the fifth transaction had run, every liquidity change in those pools was signed by Wallet A, Wallet B or the Argus minter. The trader was buying from and selling to itself.

That also explains the cost. Each round trip came back about 0.6% short, $176,500 across the five. In a normal pool that shortfall goes to whoever supplies the liquidity, and here that was the same contract. Across all five, the net USDC paid into the pools came to less than $900. In the two Argus-named ones it was zero.

We have not decoded the custom contracts themselves. The add, swap and remove steps come from the pools' own event logs, so they are measured, as are the totals.

One detail is worth stating plainly. Bitquery's own index counted these swaps too. The pool executed them, and the liquidity on the other side belonged to the trader. Any tool that adds up swap amounts, ours included, will report them as volume unless someone looks at who was trading.

05 — The airdropA thousand empty addresses, up to $26,000 each on paper

The Argus-named token came with a second step. Less than two minutes after minting it, the same address sent it to 1,000 addresses, all within 14 seconds. The amounts ran from about 360,000 to 1.4 million tokens, 900 million in all. At the pool's price of about 1.8 cents, the typical address got about $16,600 on paper and the largest about $26,000.

None of the 1,000 has done anything else on Arc. Since launch day, not one has held any USDC to pay gas or held the real ARGUS, and not one has sent a transaction in the four days of data we can see. That makes them look like padding: a token with a thousand holders looks widely owned on a screener. This is our reading, and how the minter picked them is untraced.

A handful of other wallets did sell the token, and they got real USDC, a few dollars to a few hundred each. We did not test what happens when someone tries to sell the full amount, and we are not claiming the token is a trap. What the record shows is narrower: a token was handed to a thousand addresses, given a familiar name and a believable price, and pushed to the top of the chain's volume table inside the same four minutes.

The minter kept working with the two wallets after that. Over the next day, the same Argus-named tokens moved between it, Wallet A and the contract Wallet B trades through.

Wallet A called that contract six times in all. Wallet A and the minter also managed Argus-named liquidity through a third contract, 0xe455…829f, listed in full in section 09. Each pulled out money the other had put in. The same tokens pass between the three addresses, and the same contracts serve all three. Who controls them is still unknown.

We have covered the same playbook on other chains, in the $LAPTOP counterfeit market, the counterfeit SOL wash machine and our test of whether wash trading ever draws a real crowd. Arc is five days old and already has its own.

06 — Is Arc a payments chain instead?We checked the transfers too

A fair objection: Arc was built for payments, so judging it by DEX volume may miss the point. Tron is the model here, a chain where most of the activity is people sending stablecoins to each other. So we counted those on Arc for September 20.

Most USDC that moved on Arc that day moved inside swaps and other contract calls. Of the $10.3 million that went straight through the USDC contract, $8.4 million was new USDC being minted or old USDC being burned, in five transfers. One account paid out $1.12 million to 3,782 addresses. Wallets paying each other directly moved $0.79 million.

Nearly six in ten of those calls were relayed tiny payments: 10,410 of them worth $107 in all. That is the format x402 payments by AI agents use. It is also what farming for a future airdrop looks like, and the records alone do not say which. The ten busiest payees took 4,604 of them from the same 24 payers. One busy address looked nothing like that: it took 871 ordinary transfers worth $475,500 from 708 senders.

That does not settle what Arc becomes. Five days is early, $9.3 million of new USDC was minted on Arc that day, and a payments chain is built by firms that move slowly. It does mean the payments story is not yet visible on-chain, and the trading story needs the two tokens above taken out before anyone reads it.

07 — What to checkBefore you trust a volume table on a new chain

08 — SourcesOff-chain sources

Every figure about swaps, transfers, balances and mints here is on-chain data from the Bitquery Arc API, using the DEX trades API for swaps and the Arc mainnet docs for the network's USDC model. Three claims rest on something other than the chain.

09 — Still openThreads we did not pull