Whoever makes your market can sell into you, and nothing in the contract stops them

What happened yesterday

It isn’t insiders selling, it isn’t the team leaving, it isn’t bad news reaching the market. It is the counterparty that was supposed to make the market selling it, on its own account, ignoring the obligations it had signed.

And it is the third story of the same kind in seven months. Together the three describe a structural defect, not three incidents — which is why I am writing a position about it instead of a news story.

Why they hold that power

In the first three to six months after listing, when the genuinely tradable share of tokens is small, that ten percent isn’t there to provide liquidity: it is there to decide the price. And if whoever holds it chooses to sell into a thin market, it triggers the forced closes of everyone trading with leverage and takes the price down seventy or ninety percent without the project having done anything wrong.

The most uncomfortable part is that nobody knows how many tokens are genuinely available. The unlock calendar written in the documents is one thing, the over-the-counter market where those tokens trade beforehand is another — and that second market turns the first into a piece of narrative.

The case I measured

The onchain analysis done at the time counted 17 wallets that had deposited 43.6 million tokens onto the exchanges before the crash, for about $227 million: 4.7 percent of the circulating supply. Two of those wallets were linked to a strategic investor. Those are third-party numbers and I report them as such; what is ours is the price.

What followed says it better than any commentary: on the day I write, seven months later, the token is worth $0.0784 — at −99.1 percent from the peak of 23 February 2025. There was no bounce, and there was nothing to bounce: what broke wasn’t the price, it was the belief that the price meant anything.

And the other two stories

And there is a precedent that should close the question of whether these are exceptions. In October 2024 the FBI created a fake token to draw in dishonest market makers: 18 people and companies charged, 4 market makers accused, over $25 million seized.

In that investigation one of those charged explained the business model better than any analysis could: the aim on the secondary market is to find buyers in the community, people you know nothing about and care nothing about, because to make money you have to make them lose it. That isn’t a journalist’s inference: it is a sentence said by somebody doing it.

In the 2024 FBI investigation one of those charged described his own business model as looking for buyers in the project’s community — people you know nothing about — because the market maker’s gain comes from their loss.

What I do before buying anything newly listed

The declared liquidity is no use: the daily volume is inflated by the market maker trading with itself. The prudent rule I use is to treat a tenth of the declared volume as real, and not to hold a position bigger than a fifth of that figure — so that if I have to leave, I leave without moving the price myself.

The rest is size and patience: a small share of the portfolio, the entry spread over weeks rather than a day, and a clear understanding that the risk here isn’t that the project fails. The risk is that the project does brilliantly and the token loses ninety percent anyway, because whoever decides that isn’t the one building it.

Before buying a newly listed token: check who makes the market and whether the agreement is public; estimate the tokens genuinely in circulation from the movements rather than the documents; measure the concentration; simulate the effect of the first wallet leaving. On size: treat a tenth of the declared volume as real and don’t exceed a fifth of that figure.