HomeOPINIONWhat the YZY meme coin disaster reveals about crypto’s regulation gap

What the YZY meme coin disaster reveals about crypto’s regulation gap

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YZY meme coin launched on August 21, 2025, after Rapper Kanye West unveiled the token through an official post on X. Describing it as a new economy built on-chain, the involvement of the celebrity attracted more visibility to the meme coin. 

By that, the debut of the Solana-based YZY token sent shockwaves across the cryptocurrency market. In the first few opening minutes of its market appearance, the meme coin reached a market capitalization of $400 million with an all-time high of $3.16. 

Within 40 minutes after the launch, YZY already gained more market cap rising to a massive $3 billion. The token quickly rose to the top of the charts for top-performing cryptocurrencies within that period after soaring by 1,400% just a few hours after launching. 

During the run, YZY attracted much attention from retail traders who are scared of missing out on the next big thing in the cryptocurrency market. However, in less than a few days after arriving on the market, the YZY token went down, causing retail investors to lose massive funds. 

Inflicting serious losses on early backers, the token dipped by more than 80% in a few days. As indicated, above 51 thousand traders lost their investment worth about $74 million to the meltdown. 

Controversies surrounding the YZY token

Thereafter, on-chain analysis disclosed how few wallets hold a majority of the coin’s total supply. Reports disclosed that insiders dumped the huge holdings at the height of YZY’s market success. 

According to Conor Grogan, an executive at Coinbase, insiders control 94% of the token supply. Grogan mentioned how one single multisig wallet held 87% of the YZY before distributing it to different wallets. 

Likewise, on-chain analytics platform Lookonchain raised an alarm on how the project’s liquidity pool only contains the YZY token. The platform said such a position gives the project team a smooth pathway to sell the tokens anytime they like. 

Meanwhile, Kanye West has so far denied his involvement in the token. On August 26, the rapper made a shocking disclosure that his social media accounts were hacked, mentioning that his Instagram post is now following a fake coin “yzytoken.”

Before then, he only followed one account which belonged to his wife, Bianca Censori. Backing his claims, one user uploaded a screenshot where Kanye West warned his fans that a company approached him to promote a fake token on his social media pages, promising him $2m. 

In the post, the rapper disclosed that the scammer only demands that the posts promoting the coin stay up for 8 hours, he can then take them down and claim he suffered a cyber breach. 

How crypto regulation could have protected investors 

The absence of a framework for the cryptocurrency space in some key hubs has continued to expose investors to huge market risks. At the moment, the digital asset sector is largely operating in a gray area, allowing vices like illegal promotion, insider trading, and other manipulation to become a regular pattern in the decentralized sphere. 

In recent times, many celebrity meme coins have launched with most ending up to be scandalous. The likes of Kim Kardashian, Mayweather, Akon, Paul Pierce, and political figures like Javier Milie, and Donald Trump are connected to some crypto projects that recently launched and inflicted serious losses on investors. 

If the crypto market had been under a regulatory regime, investigations into fraud and market manipulation would have trailed the meltdown of the YZY token. With the controversy trailing the YZY, the project is yet another digital asset, promoted by a celebrity only to claim millions of investment from the investing community. 

Conclusion 

The YZY is not another case of rug pull, it reflects the consequences when hype meets an unregulated market. To an extent, crypto is flourishing on the idea of decentralization and financial freedom, however, how digital assets have become a tool for manipulation and exploitation demands the introduction of proper regulation. 

Hence, it is important for the cryptocurrency sector to come under proper regulation for the sake of its future. With poor investor protection, the industry is on the verge of a massive decline due to thousands of rug pulls.

If not checked, cases like that of the YZY token will further erode investors’ trust in the sector and even set a precedent for other celebrities to hit huge cash outs. 

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Olaleye Komolafe
Olaleye Komolafe
Olaleye is a professional reporter with vast experience in web3, cryptocurrencies, and NFT journalism. He enjoys writing about the evolving metaverse sphere and the prevalence in the crypto sphere. Notably, some of his contents have been published in numerous international publications. Away from the crypto world, Olaleye is a political scientist and a lover of football

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