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Crypto Sleuth Exposes Worldcoin Insider Trading Scandal Ahead of Token Unlock
In a recent exposé, renowned cryptocurrency 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 is based on research by top Bybit trader DefiSquared. The research uncovers several tactics used by Worldcoin to manipulate the price of its token. It also raises concerns about the integrity of the project and the motivations of its backers.
Worldcoin Insider Trading Allegations
DefiSquared’s article provides a detailed look at Worldcoin’s tokenomics and market strategies. According to DefiSquared, Worldcoin is ready to begin insider unlocks with only 2.7% of the circulating supply. The article outlines how the team has meticulously controlled the price to maintain a fully diluted valuation (FDV) of $30 billion, while misleadingly claiming not to be involved in price manipulation.
When World currency 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 just over $2.
This strategy was designed to prevent the price from rising too high. Worldcoin CEO Alex Blania has previously discussed this approach. Blania said it was necessary to prevent the price from “going to $10,” which he described as “horrible.” Despite this, Worldcoin did not renew its market maker contract in December. This led to a price spike to nearly $12 within a month.
Discrepancy in actions and statements
Recent research highlights a significant discrepancy between Worldcoin’s public statements and its actions. While the team claims to have minimal control over the token’s price, its decisions on market maker contracts, issuance, and tokenomics suggest otherwise. This discrepancy raises questions about the project’s transparency and the true intent behind its low circulating supply.
ZachXBT has denounced several aspects of Worldcoin’s practices. Additionally, DefiSquared has highlighted the inconsistency in Worldcoin’s rationale for a low float, which was initially justified by the need to prevent unequal distribution of Universal Basic Income (UBI). Furthermore, his analysis points out that within a year, insider issuance will constitute over 60% of the circulating supply. This has favored insiders rather than UBI recipients.
Further examination reveals that Orb operators, responsible for collecting biometric data, sent large quantities of WLD to cryptocurrency exchanges
like Binance. One trader was found sending nearly $150,000 worth of WLD to Binance every three days during a price spike to $12 in March. So, this activity suggests that insiders are taking advantage of the market conditions to liquidate their holdings.
Read also: WLD Price Soars 21% as TFH Announces Token Block Extension
Charges against VC and Sam Bankman-Fried
One of the most concerning findings is the significant participation of WLD by Korean retail investors. At the time of writing, nearly 25% of all outstanding 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 active selling of tokens by the Worldcoin Foundation to trading desks. This has led to a 70-80% loss of value for many holders in recent months. Furthermore, DefiSquared research has also highlighted suspicious timing of positive Worldcoin press releases.
Just a week before the insider was unblocked, Worldcoin announced a small change to unblock the selling pressure. This effectively increased retail interest and liquidity for the insider exit. So, the detective suggests that someone within the team or their associates may have used inside information to profit from this news before it was publicly announced. He highlighted the WLD price spike 24 hours before the announcement to prove his point.
Meanwhile, in a post by X, Worldcoin said it prioritizes 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 criticized Worldcoin’s team and investors, calling them “scammers.”
He also targeted venture capitalists and other investors who invested in Worldcoin. Among them, former Coinbase executive Nick Tomaino, FTX founder Sam Bankman-Fried and 3AC. ZachXBT accuses them of being complicit in what he calls the “biggest token scam of the bull run.”
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