Worldcoin Accused of Being the ‘Biggest Scam’ of the Bull Run

ZachXBT has labelled Worldcoin (WLD) as the “biggest scam token of the bull run.” The on-chain researcher referred to a report published by DefiSquared, which alleges manipulations by the team.

Shame on all of the VCs and team members who are complicit in the biggest scam token of the bull run and did nothing to prevent it.

— ZachXBT (@zachxbt) July 17, 2024

At the time of writing, the project’s representatives have not responded to the accusations.

The statement came just days before the insider unlocking of WLD on July 24.

According to DefiSquared, the available supply remains at 2.7% — 276 million WLD out of a total of 10 billion. This is one of the lowest ratios ever observed for a major venture-backed cryptocurrency project, raising concerns among analysts about the asset’s inflation.

Researchers highlighted several examples casting doubt on the behaviour of the Worldcoin team:

• implementation of a price suppression formula for market makers;
• sudden cancellation of a quote control mechanism, leading to a price surge;
• public denial of involvement in creating such a tool, despite evidence to the contrary;
• maintaining an extremely low available supply under the guise of fairness.

One of the most alarming aspects of the report is the identification of unexpected victims in this alleged scheme. According to DefiSquared, a significant portion of WLD holders are Korean retail investors, many of whom may not fully understand the risks due to language barriers.

Insider Trading Suspicions

The research also points to the possibility of insider trading: suspicious price movements occur just before important announcements. This pattern raises questions about the ethical standards of the Worldcoin team and its associated venture capitalists.

As evidence of the latter hypothesis, analysts cited the token’s reaction to information about extending the lock-up period for investors, Tools for Humanity developers, and early project participants from three to five years.

On that day, the price momentarily jumped by 34%, but the increase was observed before the data was announced.

ZachXBT agreed with DefiSquared’s conclusions.

“Shame on all the venture investors and team members who are complicit in the biggest token scam and did nothing to prevent it,” he wrote.

Previously, ZachXBT uncovered the laundering of over $35 million, obtained from the May hack of the DMM Bitcoin cryptocurrency exchange, through the Cambodian online marketplace Huione Guarantee.

In July, the company behind Worldcoin, Tools for Humanity, appointed four high-ranking former employees of Apple, Google, Meta, Tesla, and X to leadership positions.

The Worldcoin Foundation team also launched a preliminary version of the L2 solution World Chain for developers.