The $ balance scandal: how the tokens even become new ICOs
Last week, an event took place which, in my opinion, delegitimate what was announced as the latest trend in this cryptography cycle: tokens approved by public figures or celebrities. This trend collapsed when Javier Milei, the president of Argentina, was accused of facilitating fraud via a token called $ libra. This was marketed as a project collecting funds to make real investments turned out to be a pumping and smoke program, leaving 86% of investors with a combined loss of $ 251 million, while initiates would have pushed with $ 180 million in profits.
What was supposed to be a legitimate project, the launch of $ balance was a disaster that will have lasting effects on the digital currency industry. One of the developers behind the launch, Hayden Davis, recently sat for an interview with Youtuber Coffeezilla to tell his side of the story. While Davis did it to try to empty his name of the alleged accusations of swirling fraud around the project, which he ended up doing in the process was to expose the mechanisms behind the “same” launches – mechanisms that roughly solidified the idea that these launches share more similarities with Ponzi’s patterns than with viable investments.
The mechanics of the token even lance
First of all, let’s define a same. Many tokens launched today are marked as “even tokens”, digital collectibles that exist supposedly for entertainment and community commitment. The legal warnings of these launches underline that they are not investments and are intended for pleasure only. But it is clear that this whole language is only the legal that lawyers probably advise the launch teams to use for a little legal protection because, under the hood, these projects are designed to earn money, mainly for the closest to the project.
In reality, even token launches today is only the 2025 version of the initial enthusiasm of the range of parts (ICO). Retail investors intervene, hoping for yields that change life, but the chances of making a profit – or even breaking – are slim.
Almost every successful launch of the same success follows the same gaming book. The retail investors – the backbone of these launches – are generally introduced to the token via a celebrity, an influencer or a public figure with a massive suite, generally through an article on social networks which sends them to rush to buy the token. For what it is worth, I think that an investor might want to support a token for several reasons. The most important reason is probably that they have the hope of earning rapid money, but it is also possible that they buy the token with real support for the person behind the launch or because being the owner of a token will give them access to a kind of exclusive community.
Anyway, once retail investors are starting to buy, the real magic occurs – at least for initiates. It is also when things are starting to be wrong for everyone.
Crypto snipers and liquidity pools
During his interview with Coffeezilla, Davis revealed that almost all the launchers of high -level memes are affected by internal and external “elite shooters”. These are traders – often using bots – which buy large amounts of tokens when the launch is online, generally pumping millions of liquidity in the first minutes of a launch of token. Because they enter so early, they are in a privileged position to make significant benefits, but their actions also destabilize the entire market.
In the case of $ balance, the liquidity pool was not large enough to support the massive sales of elite shooters. As a result, when these elite shooters threw their tokens, the price collapsed, which sparked a sale whose project could not recover.
What is even more revealing is that, according to Davis, the launch team of $ Balance itself has acted as elite shooters. He said that this practice was common in the launches of major tokens, including the launch of Token $ Melania in which he was also involved. These teams monitor the liquidity of the swimming pool, trying to create a price price that prevents the token from crashing too quickly. However, they also retain liquidity to reinject it later to artificially inflate the price of the token when they start their next marketing wave.
Why Crypto retail investors lose
As you can see, this whole structure is rigged in favor of the initiates. Those who have early access to the project can allocate their funds accordingly and maximize their profits, generally to the detriment of retail investors who enter late.
Retail merchants increase the price, making the initiates attractive to withdraw money. Once these initiates sell, the price of tokens is blocking and the liquidity pool shrinks to the point where many investors cannot even exchange their chips, or if they do it, it is a significant discount. Consequently, most investors end up holding assets without value while initiates leave with massive gains.
This problem has been well known in the crypto for years, but hearing it directly from a person like Davis, who facilitates many of these high -level launches, brings the problems that consumers are confronted in the digital currency market on the surface in a way that has not really needed to be confronted from the first Boom of ICO: the fact that these launchers are not more than pump schemes launchers.
If it happened on the stock market, regulators would call it the offense of initiate and people would face criminal charges. But in the crypto, these activities enter a regulatory gray area. Because tokens are not classified as titles, the same legal standards do not apply. And now, with the lax position of the current administration on the regulation of digital assets, these patterns are actually authorized.
One of the biggest problems with the tokens even is that, because of their structure, they have little chance of long -term survival. Unlike traditional actions, where investors ‘money feeds the growth of businesses, most of the same projects extract investors’ money without providing real value in return. In many cases, they do not even offer a product. Once the initial media threw is decreased, the price of the token crashes and recovery is very unlikely.
Compare this to the stock market: when investors buy stocks in a company, their capital is used to extend the company, hire employees and develop new products. Even if the course of the action of a fluctuated company, an underlying company leads to a long-term value. On the other hand, even tokens are often nothing more than speculative assets that exist only so that initiates extract liquidity to the detriment of the retail investor.
The future of crypto: a critical crossroads
Before looking to the future, let’s assess what has happened so far in 2025. In the past two months, three high -level same launches – $ Trump, $ Melania and $ balance – all collapsed, losing 71%, 90% and 80% of their value, respectively. In each case, the chain data suggest that the project teams, as well as the initiates, have benefited considerably, while the retail investors who joined after the launch were announced publicly who were left by holding the bag.
In addition, the “user-friendly” position of the Trump administration adds to this problem, because it has deleted many regulatory railings which were in place to prevent fraud, including key dry personalities who previously repressed fraud in the cryptographic world but who have now been dismissed or moved to different services, which creates an environment where the same proliferates.
This raises an important question: should cryptographic markets be regulated as the capital markets?
Under the former president of the SEC, Gary Gensler, the regulators took an aggressive position on the crypto, classifying many tokens as titles and repressing fraudulent projects. But with people in disappeared, the regulatory examination has practically disappeared, effectively transforming the cryptography market into a free west for all.
Initially, many in the industry applauded the release of regulations, believing that this would allow crypto to thrive. But now it becomes clear that a completely unregulated market does more harm than good.
This brings us to the place where we are today: the industry is at a turning point where the crypto has the possibility of ripening in an environment where it is easier to do business without regulatory examination and report requirements – which, if they are properly exploited, can create an environment that supports the growth of high -level casino where initiates are rich in the course of sale.
Unfortunately, I think we started on the path of the latter, and unless something is changing in the coming months, I see that the start of the year gives the pace to what will be the next three years of what we can expect that the cryptocurrency industry looks like the Trump administration.
Watch: History of Bitcoin with Kurt Wuckert Jr.
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