Solana News Today: Kanye's YZY Coin Soars Then Crashes on Insider Frenzy

Kanye West, formerly known as Ye, launched a memecoin called YZY on the Solana blockchain, generating significant volatility and investor losses. The token briefly reached a $3 billion market capitalization within 40 minutes of its launch on X, but the value quickly plummeted to just over $1.05 billion as concerns over insider sales and trading emerged [1]. The YZY token, part of a broader financial ecosystem called YZY Money, was described by West as a “financial system built on crypto rails” to facilitate transactions and digital payments [2].

The token’s distribution raised red flags among on-chain analysts. According to data from Lookonchain, 94% of the token supply was held by insiders, with a single multisig wallet reportedly controlling 87% of the tokens prior to their distribution across multiple wallets [1]. The liquidity pool, which was filled solely with YZY tokens, allowed developers to sell at will by adjusting liquidity, further compounding concerns over the token’s integrity. One user reportedly lost $710,000 after accidentally purchasing the wrong token before recovering the loss by buying the correct one later [1].

Early trading patterns also suggested possible insider knowledge. Within minutes of the X announcement, eight traders each bought over $90,000 worth of YZY and rapidly cashed out, with one of them turning a $500,000 investment into a $1.77 million profit within 10 minutes. Analysts speculate that this indicated an information leak, which would give early traders a significant advantage [2]. The token’s design attempted to counteract this risk by deploying 25 contract addresses and selecting only one at random as the official token, reducing the chances of “sniping” by traders [4]. Nevertheless, the rapid sell-off by insiders led to a 60% drop in value for most investors, with Nansen reporting that more than $20 million had been collectively lost by traders [2].

Despite the controversy, several high-profile traders have invested in YZY. Leverage trader James Wynn, for example, cited the success of President Donald Trump’s eponymous memecoin, which quadrupled in value within 28 hours, as a reason to invest in YZY as a short-term play. Wynn expressed a goal of doubling or quadrupling his investment [2]. Arthur Hayes, co-founder of BitMEX, also appeared to have bought into the token, though no further details were disclosed [1].

The YZY launch mirrors previous celebrity-backed memecoins, including Donald Trump’s $TRUMP token and Argentina’s President Javier Milei’s support of the LIBRA token. Both were criticized for their volatility and the risks they pose to retail investors. These incidents have prompted calls for stricter regulations on memecoins, especially those promoted by public figures. Nicolai Søndergaard, a research analyst at Nansen, noted that tokens with concentrated ownership structures often see sell-offs once unlocking periods end, which could further depress prices [2].

Kanye West’s foray into crypto follows a pattern of erratic behavior and controversial statements in recent years, including antisemitic remarks and the release of a music video titled “Heil Hitler.” His decision to launch a memecoin—despite previously dismissing such projects—adds another layer of unpredictability to his public persona [2]. As of the time of writing, the YZY token continues to be traded, with the majority of investors still holding losses and the broader market watching closely for further developments. The incident underscores the growing trend of celebrities entering the crypto space, often with mixed outcomes and heightened scrutiny from both investors and regulators.

Source:

[1] Kanye West YZY memecoin hits $3B, but falls after insider ... (https://cointelegraph.com/news/kanye-west-memecoin-pumps-3b-launch-then-falls-amid-insider-concerns)

[2] Kanye West Said Memecoins 'Prey On Fans.' Then He ... (https://www.wired.com/story/kanye-west-memecoin/)

[3] Kanye West drops YZY meme coin on Solana (https://cryptobriefing.com/yzy-meme-coin-solana-launch/)