Crypto Sleuth Unmasks Worldcoin Insider Trading Scandal Ahead Token Unlock
In a recent expose, prominent crypto detective ZachXBT has highlighted potential insider trading and questionable practices by the Worldcoin team as the project nears a significant token unlock. ZachXBT’s investigation builds on research by top Bybit trader DefiSquared. The research brings to light several tactics used by Worldcoin to manipulate its token price. Moreover, it raises concerns about the integrity of the project and the motivations of its backers.
Insider Trading Allegations On Worldcoin
DefiSquared’s article provides a detailed examination of Worldcoin’s tokenomics and market strategies. According to DefiSquared, Worldcoin is set to commence insider unlocks with just 2.7% of the supply circulating. The article outlines how the team has meticulously controlled the price to maintain a $30 billion fully diluted valuation (FDV) while misleadingly claiming no involvement in price manipulation.
When Worldcoin launched, it did so with a circulating supply of 1.4% or 140 million WLD tokens. The team allocated 100 million of these tokens to market makers, granting them a call option to buy back a significant number of tokens at a little over $2.
This strategy was designed to prevent the price from spiking too high. Worldcoin CEO Alex Blania has previously discussed this approach. Blania stated that it was necessary to avoid the price “spiking to $10,” which he described as “horrific.” Despite this, Worldcoin did not renew the market maker contract in December. This led to a price spike to nearly $12 within a month.
Discrepancy In Actions & Statements
The latest research underscores a significant discrepancy between Worldcoin’s public statements and its actions. While the team claims minimal control over the token’s price, their decisions on market maker contracts, emissions, and tokenomics suggest otherwise. This discrepancy raises questions about the project’s transparency and the true intent behind its low circulating supply.
ZachXBT has called out several aspects of Worldcoin’s practices. Moreover, DefiSquared highlighted the inconsistency in Worldcoin’s rationale for a low float, which was initially justified by the need to prevent unfair distribution for universal basic income (UBI). In addition, his analysis points out that within a year, insider emissions will constitute over 60% of the circulating supply. This benefited insiders rather than UBI recipients.
Further scrutiny reveals that Orb Operators, responsible for collecting biometric data, have been sending large amounts of WLD to exchanges like Binance. One operator was found to be sending nearly $150,000 worth of WLD to Binance every three days during a price spike to $12 in March. Hence, this activity suggests that insiders are taking advantage of market conditions to liquidate their holdings.
Allegations Against VCs & Sam Bankman-Fried
One of the most troubling findings is the significant holdings of WLD by Korean retail investors. At the time of writing, nearly 25% of all circulating WLD is held on Bithumb, a major South Korean exchange. These retail investors, many of whom may not fully understand the intricacies of Worldcoin’s tokenomics, are inadvertently propping up the token’s valuation.
Furthermore, this situation is worsened by the Worldcoin Foundation’s active selling of tokens to trading desks. This has led to a 70-80% loss in value for many holders in recent months. In addition, DefiSquared’s research also pointed out suspicious timing related to positive news releases by Worldcoin.
Just a week before the insider unlocks, Worldcoin announced a minor change to unlock selling pressure. This effectively boosted retail interest and liquidity for insiders to exit. Hence, the detective suggests that someone within the team or their associates may have used insider information to profit from this news before it was publicly announced. He spotlighted the WLD price spike 24 hours prior to the announcement to prove his point.
Meanwhile, in an X post, Worldcoin claimed to prioritize simplicity to build for every human. ZachXBT responded, accusing the project of allowing insiders to profit from a “scam token” while pretending to build humanitarian tools. He has criticized Worldcoin’s team and investors, calling them “scammers.”
He also cracked down on venture capitalists and other investors who invested in Worldcoin. These include former Coinbase exec Nick Tomaino, FTX founder Sam Bankman-Fried, and 3AC. ZachXBT accuses then of being complicit in what he calls the “biggest scam token of the bull run.”
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