ZachXBT and DefiSquared's Investigation

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 reveals several tactics used by Worldcoin to manipulate its token price. Moreover, it raises concerns about the project's integrity and the motivations of its backers.

Worldcoin's Tokenomics and Market Strategies

DefiSquared's article thoroughly examines 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. Despite this, Worldcoin did not renew the market maker contract in December, leading to a price spike to nearly $12 within a month.

Discrepancies and Transparency Issues

The latest research underscores a significant discrepancy between Worldcoin's public statements and 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. DefiSquared highlighted the inconsistency in Worldcoin's rationale for a low float, initially justified by the need to prevent unfair distribution of universal basic income (UBI).

His analysis indicates that insider emissions will constitute over 60% of the circulating supply within a year. 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 crypto exchanges like Binance.

One operator was found to send nearly $150,000 worth of WLD to Binance every three days during a price spike to $12 in March. This activity suggests that insiders are exploiting market conditions to liquidate their holdings.

Impact on Retail Investors

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. DefiSquared's research also pointed out suspicious timing related to positive news releases by Worldcoin.

Worldcoin announced a minor change to unlock selling pressure a week before the insider unlocks. This effectively boosted retail interest and liquidity for insiders to exit.

VC Involvement and Accusations

Meanwhile, in an X post, Worldcoin prioritized simplicity to build for every human. ZachXBT responded, accusing the project of allowing insiders to profit from a "scam token" while pretending to develop 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 them of complicating the "biggest scam token of the bull run."