The value of the YZY digital currency, owned by Kanye West, reached $3 billion within 40 minutes on the Solana blockchain before collapsing to $1.05 billion.
Analysts revealed that 94% of the digital tokens were owned by insiders at launch, with one wallet controlling 87% of the total supply.
Rapper Kanye West launched the YZY digital currency on the Solana blockchain, achieving impressive initial results, but faced significant market hurdles. The currency reached a new record of $3 billion in market value in just 40 minutes after its launch announcement on Thursday. West announced the release via his X social media platform, publishing the contract terms and announcing a new blockchain-based economy called Yeezy Money.
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West's entry into the world of digital currencies is his latest business venture, which has already expanded into other business projects in the music and fashion sectors. West explained on the Yeezy Money platform that the project aims to create a new economy based on blockchain. However, the currency's value sharply declined to around $1.05 billion, as investors began to fear the possibility of market manipulation.
Insider trading allegations cast a shadow over the launch's success
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Cryptocurrency analysts quickly noticed some suspicious activity in the market, raising doubts about the proper distribution and trading of the token. A cryptocurrency expert found that 94% of the total supply of YZY tokens was in the hands of insiders at launch. One multi-signature wallet held 87% of the tokens, which were then distributed to a variety of addresses to reduce ownership concentration.
Lookonchain also criticized the token's liquidity structure, pointing out that developers maintained excessive control over the trading mechanism. Only YZY tokens were listed in the liquidity pool, allowing developers to manipulate token prices by controlling liquidity volume. This arrangement allows insiders to sell their holdings at favorable times at the expense of ordinary retail investors.
Nevertheless, some of the most famous cryptocurrency traders are still buying YZY tokens, considering the situation an opportunity for short-term speculation. James Wynn, a leveraged trader, likened the situation to that of President Trump, whose 'meme coin' value quadrupled in 28 hours. Even BitMEX co-founder Arthur Hayes is said to have invested in the controversial token despite insider trading allegations.
Celebrity-promoted digital tokens saw mixed performance in 2024, with Argentine President Javier Milei also embroiled in controversy over promoting the LIBRA currency. The launch of the YZY token symbolizes ongoing issues in the 'meme coin' sector regarding transparency, fair distribution, and celebrity manipulation of unstable markets.