Worldcoin "money-grabbing" plan: price manipulation, deception, and unexpected victims

Author: DeFi\^2, Crypto Researcher

Compiled by: Felix, PANews

Worldcoin (WLD) has recently seen a significant price increase, rising about 45.1% over the past week. However, according to crypto researcher DeFi\^2's post on the X platform, this surge was orchestrated by the Worldcoin team for high-level sell-offs. Here are the details.

Worldcoin is expected to begin internal unlocks within 7 days, making it one of the lowest circulating tokens in the crypto industry’s history, with only about 2.78% of tokens in circulation. Given this, it makes sense to delve into how the project achieved this status. This article reveals how the Worldcoin team has subtly controlled the price to maintain an FDV of about $30 billion at the start of the internal unlock.

First, some background. When Worldcoin first launched, the circulating supply from the foundation was 1.4%, or 140 million WLD. While there were concerns that such a low circulation would lead to a very high FDV at launch, the team allocated 100 million WLD to market makers and provided them with call options, allowing them to repurchase a large number of tokens at slightly above $2 at the end of the contract, aiming to prevent the price from skyrocketing. Allocating supply to market makers to create favorable prices is not uncommon in the industry.

The old Worldcoin whitepaper from 2023 describes the price suppression formula provided to market makers.

As expected, WLD could not significantly exceed the call price during the contract period, as market makers would "suppress" the price. Worldcoin CEO Alex Blania also discussed in a video the necessity of this contract to prevent price disruptions in the market:

Worldcoin's CEO introduced their technique for suppressing prices to avoid WLD soaring to $10. Later that year, they refused to renew the contract, and WLD soared to $10. (Source: The Scoop Podcast)

Note his wording; his aim is to prevent the price from "soaring to $10," and he further states that such a situation would be "terrible."

Nonetheless, on December 16, with a circulation of only 1.2%, Worldcoin decided not to renew the market maker contracts, canceling the call options that suppressed the price and even further removing an additional 25 million WLD from circulation. At that time, with extremely low market maker participation, its market cap was only $98 million, and the price predictably soared by 100% within a few hours, which was precisely the situation Blania claimed they were trying to avoid.

Clearly, the team realized that publicly describing how they controlled the price was unwise, so when asked at Token2049 in Dubai whether they were concerned about the price, the Worldcoin CEO claimed they could not control the price, which was driven by the market:

Worldcoin's CEO stated that despite their actions to change policies and token economics, which had a significant impact on the price, they had little relationship with the price.

But that is not the case. Only under the design of the team's token economics could an 11-digit (over $10 billion) valuation be achieved, and the daily price movements of the token are influenced by the team in many cases, as they actively alter the unlock amounts, market maker contracts, and announcements before unlocks. This raises the question: why do they act this way?

Returning to the beginning of this article—at the time of the insider unlock, the circulation was only 2.7%, which may be the lowest ratio ever seen in crypto history supported by major VCs at the time of unlock. It is worth noting that this may also be the only reason WLD can sustain an astonishing $30 billion FDV, as insiders will soon be able to sell at this price. But why is the circulation so low? According to Blania in 2023, they had to keep the circulation low because "releasing 10% of the supply all at once is completely unfair" for UBI (Universal Basic Income):

Worldcoin's CEO defended the low circulation, claiming it was for UBI. It is puzzling that the token economics designed by the team led to most of the issuance flowing to insiders a year later, rather than to UBI. (Source: The Scoop Podcast)

But this is precisely what the team has done with the unlocks, as these tokens ended up in the pockets of insiders rather than UBI recipients. Even with the new unlock schedule, nearly 1 billion tokens will be sent to the team/VCs over a year, while only 600 million tokens are allocated to UBI recipients based on the current UBI grants rate. This means that insiders are expected to receive over 60% of the entire circulating WLD within a year (Note: 10 divided by 16 is approximately 62.5%). Sixty percent is a significant proportion, essentially meaning the ecosystem is purely for VC companies to offload. This seems to directly contradict the current excuse of keeping circulation low to benefit UBI.

There are many other sources that increase circulation, and this supply is not aimed at UBI recipients. Operators like Orb sometimes earn over 20,000 WLD per week by collecting biometric data from vulnerable groups and sending it directly to Binance:

When the WLD price soared to $12 in March, Orb operators sent nearly $150,000 worth of WLD to Binance every three days.

With such low circulation, who are the current victims holding nearly $30 billion FDV and maintaining a high valuation at the time of unlock? Data shows that a large portion is retail investors from South Korea, many of whom may not even understand English, let alone the situation. At the time of writing, Bithumb holds nearly 25% of the circulation:

As the internal unlock approaches, the amount of WLD held by South Korean retail investors on Bithumb continues to grow. Due to the Worldcoin Foundation actively selling tokens, most of these assets have depreciated by 70-80% in recent months. (Source: Arkham Intelligence)

Given this, it may not be a coincidence that Worldcoin released positive news just a week before the unlock. Although this was just a small change to relieve sell pressure, the fact is that the news proved very effective, forcing retail investors to provide higher prices and more liquidity unknowingly, allowing insiders to exit within a week. Worse still, it seems possible (though unverified) that someone within the team or venture capital used insider information to buy in advance before the announcement was made public.

The chart shows a coincidental price surge within 24 hours before the announcement of the unlock delay.

While such behavior is not uncommon in the crypto space, many market participants still do not understand the intricacies involved. This article aims to reveal a project that seems intentionally propping up a token that should have a lower price, with many of the reasons listed explaining why the author intends to short WLD in the months following the unlock.