Insider Trading Scandal Explodes: Small Wallet Group Dumps $24M of Kanye’s YZY Token

Another day, another crypto controversy—this time with a celebrity twist.

Patterns of Profit

Blockchain analytics reveal a coordinated dump of $24 million in YZY tokens just before negative news hit mainstream channels. The transactions trace back to a handful of interconnected wallets that accumulated positions during early token distribution phases.

Regulatory Gray Zone

While traditional markets have clear insider trading rules, crypto's decentralized nature creates enforcement challenges. The usual suspects—whispers in private chats, strategic timing, and sudden liquidity movements—all point toward information asymmetry playing its predictable role.

Market Fallout

Retail holders got left holding the bag as prices cratered post-dump. The incident reinforces what crypto veterans already know: when big money moves, the little guy rarely gets the memo first. Just another reminder that in crypto, 'decentralization' sometimes just means 'unregulated advantage.'

YZY token profits concentrated among a few wallets

Nansen data showed that 13 wallets each netted over $1 million by dumping YZY tokens into the market, collectively booking $24.5 million in realized profits. Many of these addresses had access to the contract address before the public launch, which could have given the owners an insider advantage.

Out of the first 99 wallets that purchased YZY, only nine still held the token as of Friday, according to blockchain queries. More than 56,000 wallets interacted with YZY at some point, with about 27,000 still holding at least $1 worth of the coin.

A Dune Analytics two-way investments pie chart showed that losses outweighed gains for most traders. The chart indicated that nearly two-thirds of addresses, or 64.1%, ended up with small losses between $0 and $500. 

Another 27.4% of wallets were in modest profit within the same $0 to $500 range. About 5.3% of traders lost between $1,000 and $5,000, while another 2% recorded losses as from $500 to $1,000.

Blockchain sleuths have traced individual transactions that counted profits, including one wallet identified as 6MNWV8, which spent 450,611 USDC to acquire 1.29 million YZY tokens at $0.35. Minutes later, it sold 1.04 million tokens for $1.39 million, leaving $249,907 worth of YZY on hand. The trade secured a profit exceeding $1.5 million.

Another trader, identified as 2DNb2C, mistakenly purchased the wrong YZY token in a separate contract the day before the launch, losing $710,000. The same wallet later spent 761,000 USDC on the actual YZY, flipping it for a profit greater than the initial loss.

While insiders cashed in, some retail traders like one labeled 6ZFnRH spent 1.55 million USDC to buy 996,453 tokens at $1.56. Within two hours, it sold the stash for 1.05 million USDC, realizing a $500,000 loss.

Another trader, 0x68c0, opened long positions on YZY three times, collectively losing more than $200,000.

The largest loss tracked by Nansen was $1.8 million from a single wallet, while another wallet lost $1.2 million. A separate address continued holding YZY with unrealized losses of more than $800,000.

Market researcher Dexter Lab said that the YZY launch was a textbook “pump-and-dump.” In a thread posted on X on Thursday, the account claimed insiders controlled nearly all of the supply on the first day.

According to its analysis, insiders owned 94% of the tokens, with one multisignature wallet controlling 87%. The six largest wallets collectively held over 70% of the supply. Liquidity pools were also made for insiders to offload their holdings directly into retail liquidity.

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