The individual behind the Libra (LIBRA) token has introduced a new memecoin exhibiting concerning on-chain activity patterns reminiscent of significant insider trading ahead of the token’s drastic 99% decline.
Hayden Davis, who co-created the Official Melania Meme (MELANIA) alongside the Libra token, has now launched a Solana-based memecoin that boasts over 80% of its supply held by insiders.
The new coin, named Wolf (WOLF), was unveiled on March 8, amid speculations surrounding Jordan Belfort, famously known as the Wolf of Wall Street, creating his own token.
Despite achieving a peak market capitalization of $42 million, data from a March 15 post revealed that 82% of the WOLF token’s supply was controlled by a single entity, raising eyebrows about its origins.
“The bubble map revealed something unusual — $WOLF mirrored the same pattern as $HOOD, another token launched by Hayden Davis. Could he be behind this as well?”
Blockchain analytics showed that transfers had been traced across 17 different addresses linked to an account owned by Davis.
“He funneled funds into these wallets several months before launching $LIBRA and $WOLF, moving money through multiple addresses and across two separate chains,” the analytics report noted.
The Wolf memecoin witnessed a staggering loss of over 99% within just two days, plummeting from a high of $42.9 million in market cap at 4:00 a.m. UTC on March 8 to a mere $570,000 by the time of reporting.
Davis’ latest offering follows the collapse of the Libra token, where eight insider wallets cashed out a total of $107 million, resulting in a swift $4 billion reduction in market capitalization.
The Libra token has sparked political controversy, with Argentinian President Javier Milei facing potential impeachment due to his support for it.
A lawyer in Argentina has requested Interpol to issue a Red Notice against Davis, citing that he poses a “procedural risk” as he could access significant funds that might enable him to evade U.S. authorities or disappear.
Memecoins are becoming tools for “retail value extraction”
Memecoins are straying from cryptocurrency’s core principle of decentralization, increasingly being utilized to take advantage of retail investors amidst a surge of rug pulls, according to Anastasija Plotnikova, co-founder and CEO of a blockchain regulatory firm.
“Memecoins have transitioned from community-driven experiments into a chaotic scene focused on value extraction from retail investors,” Plotnikova remarked, adding:
“Insider groups, pump-and-dump schemes, and sniper tactics have supplanted the organic, collectible charm of original memecoins, creating an imbalanced playing field.”
Investors must differentiate between memecoins considered genuine “collectibles” and those used for “outright fraudulent actions” such as rug pulls, which are “not only unethical but unequivocally illegal, with legal precedents supporting enforcement.”
“In my opinion, these actions should fall under the scrutiny of law enforcement agencies,” she concluded.
Regulators in the United States are increasingly acknowledging the rise of memecoin scams.
A lawmaker from New York has proposed legislation introducing criminal penalties to combat cryptocurrency fraud and protect investors from rug pulls, highlighting the urgency of the issue.
This proposal would create new criminal charges related to “virtual token fraud,” specifically targeting deceptive practices associated with cryptocurrencies.