Kanye West's cryptocurrency 'vanishes'

Kanye West's Memecoin YZY plummeted within hours of its launch. Photo: Blockchain Magazine .

Memecoin YZY, endorsed by rapper Kanye West, made a sensational debut on the Solana network, reaching a market capitalization of $3 billion in just 40 minutes. However, concerns about insider trading and liquidity structure quickly dragged the token's value down significantly.

On social media platform X on August 22nd, Kanye West announced the contract address along with the Yeezy Money website, describing it as "a new economy , built on blockchain." The website states that YZY will play a key role in YZY MONEY, the decentralized finance ecosystem promoted by the rapper himself.

Immediately after the information was shared, the value of YZY surged, reaching a market capitalization of $3 billion , according to data from the analytics platform Nansen. However, the token's value plummeted after this brief surge, falling to around $1.05 billion .

On its official website, YZY issues numerous risk warnings to users, emphasizing the possibility of "losing everything" when investing in crypto assets. The project also states that it has deployed 25 contract addresses, one of which will be randomly selected to issue the official token, with the goal of limiting memecoin hunting.

However, this implementation quickly drew skepticism from observers. The investigative platform Lookonchain pointed out that only the YZY token was added to the liquidity pool, giving the developer full control and making it easy to sell off when needed.

Conor Grogan, Product Director at Coinbase, stated that at least 94% of the YZY supply is held by the project's development team. A single multi-signature wallet holds up to 87% of the total supply before being distributed to multiple other wallets. This raises concerns about centralization and the risk of price manipulation.

Several unusual transactions were also recorded. According to Lookonchain , a user allegedly with inside information mistakenly bought the wrong tokens and lost $710,000 , but later recovered the loss by buying the correct tokens. Additionally, another user paid a $24,000 priority fee for an early transaction on Solana and reaped $3.4 million . Onchain Lens reported that one trader profited up to $6 million by selling when the YZY price peaked.

Despite the risks, many traders are still participating. James Wynn, a well-known leveraged trader, suggests that cryptocurrency whales may be attracted by YZY's liquidity and large trading volume. Wynn calls it a "short-term gamble" and aims to double, or even quadruple, his initial investment.

According to Forbes , Kanye West's net worth is currently around $400 million . West previously revealed that he was once offered $2 million to promote a fake token and had to pretend his personal account was hacked to avoid responsibility.

The volatile price fluctuations surrounding YZY highlight the inherent risks of memecoins associated with celebrity names. While offering the potential for significant short-term profits, this asset class still carries the risk of total loss for small investors.