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

What happened yesterday

The seller was the counterparty that was supposed to make the market, trading on its own account and ignoring the obligations it had signed. Nobody inside the project sold, the team didn’t walk away, and no bad news hit the market.

And it’s the third story of this kind in seven months. Put together, the three describe a structural flaw, because three incidents in a row stop being incidents. That’s why this is a position piece rather than a news story.

Why they hold that power

In the first three to six months after listing, the share of tokens that can really trade is small. In that window that ten percent is there to decide the price, and liquidity is the excuse. If the holder chooses to sell into a thin market, they trigger the liquidations of everyone trading with leverage and take 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 really available. The unlock calendar in the documents is one thing. The over-the-counter market where those tokens change hands beforehand is another, and that second market turns the first into a piece of storytelling.

The case I measured

The onchain analysis done at the time counted 17 wallets that had moved 43.6 million tokens onto exchanges before the crash, worth about $227 million, or 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; the price is ours.

What came next says more than any commentary. As I write, seven months later, the token is worth $0.0784, 99.1 percent below its peak of February 23, 2025. There was no bounce. What broke was the belief that the price meant anything, and that doesn’t bounce.

And the other two stories

And there’s a precedent that should settle whether these are exceptions. In October 2024 the FBI created a fake token to lure dishonest market makers: 18 people and companies charged, 4 market makers accused, and more than $25 million seized.

In that investigation one of the accused explained the business model better than any analysis could. On the secondary market the aim 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. No journalist had to infer that. Someone who was doing it said it.

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

What I check before buying anything newly listed

You can’t trust the declared liquidity, because the daily volume is inflated by the market maker trading with itself. The cautious rule I use is to treat a tenth of the declared volume as real. Then I never hold a position bigger than a fifth of that figure, so if I have to get out, I get out without moving the price myself.

The rest is size and patience: a small slice of the portfolio, an entry spread over weeks rather than one day, and one clear idea in your head. The real risk here is that the project does brilliantly and the token loses ninety percent anyway, because the price is decided by somebody other than the people building it.

Before buying a newly listed token: check who makes the market and whether the agreement is public; estimate the tokens really in circulation from the movements rather than the documents; measure the concentration; work out what happens if the biggest wallet leaves. On size: treat a tenth of the declared volume as real, and don’t go above a fifth of that figure.