Worldcoin is facing a new wave of scam allegations.
Critics like DeFi Squared say that Worldcoin insiders have been manipulating the token's price and profiting from its short-term rallies.
Evidence presented by DeFi Squared includes changes to the token unlock schedule and suspicious price movements.
The price of $WLD is showing signs of weakness and should be avoided unless we see a break above $3.7.
Worldcoin, the world's largest identity protocol, is no stranger to controversy.
However, considering the new scam allegations against the protocol, things have become slightly more heated recently.
According to reports, Worldcoin insiders have been playing shady games with the short-term price action of $WLD and have been capitalizing on small pump-and-dump schemes within the last few months.
Let's examine whether or not Worldcoin is a scam and the evidence supporting this stance.
The "price manipulation" accusations became fully apparent after Worldcoin announced a massive change in its token unlock schedule.
According to a 16 July announcement from Tools for Humanity (Worldcoin’s parent company), the initial three-year unlocking schedule for the 80% of $WLD tokens held by the investors and team members was extended to a staggering five years, starting from 24 July.
This means that instead of ending the token unlock schedule in 2026 as planned, the $WLD will be released in small amounts until July 2028.
This was set to be good news for $WLD because the market supply would have climbed even more slowly, giving the cryptocurrency a chance to rally significantly.
And the cryptocurrency did rally in response to the news.
Worldcoin’s rally
Within two days after the announcement, the cryptocurrency skyrocketed by nearly 70% from $1.90 on 15 July to $3.20 on 17 July.
However, this is where things started to go wrong.
This market reaction to the announcement led to heavy speculation, most pointing towards a possible Worldcoin scam.
According to a post from DeFi Squared on 17 July, multiple pointers point to possible insider trading activity on Worldcoin.
For example, DeFi Squared posted a November 2023 video featuring Worldcoin CEO Alex Blania explaining their technique for suppressing the cryptocurrency's price to avoid a "spike to $10".
Despite this comment from Blania, DeFi Squared pointed out that on 16 December, Worldcoin simply "decided" not to move forward with said "technique" and even went further by removing an additional 25 million WLD from circulation.
In mere hours after this, the price of $WLD spiked by more than 100%, completing this “rally to $10” that Blania claimed Worldcoin was trying to avoid.
In less than a month, Worldcoin had spiked to nearly $12 in price, to a $120 billion valuation.
Overall, DeFi Squared alleges that Worldcoin has been manipulating the price of WLD from the start through well-timed changes to emissions, market maker contracts, and announcements.
The implication of DeFi Squared's allegations is that someone—likely an insider—would have been buying Worldcoin at lower prices before major announcements, and then taking profit on the spikes that follow.
ZachXBT also commented on the issue on Twitter, labelling Worldcoin "the biggest scam token of the bull run."
“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”, the blockchain sleuth said.
In terms of price, following the initial 3-day 80% spike after the token unlock announcement, Worldcoin's price has run out of fuel.
Worldcoin’s price action
The cryptocurrency now sits at around $2.855 after hitting a wall of around $3.245.
As it stands, the cryptocurrency risks both a rejection from $3.24 and a retest of the initial $1.77 low.
WLD should be avoided in terms of trading unless we see a clean break above the $3.68 resistance.
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