The Securities and Commodities Authority of the United Arab Emirates has launched an investigation into alleged securities violations involving the cryptocurrency $WAP, a Solana blockchain-based token heavily promoted by high-profile celebrities like Cardi B.
The probe came in the wake of a formal complaint from a prominent Dubai-based VC firm and local Emirati investors.
It accused market manipulation and fraud concerning the promotion and trading of $WAP.
Cardi B’s Crypto Endorsement Under UAE Investigation
The UAE Securities and Commodities Authority opened an investigation into potential securities law violations involving the Cardi B-endorsed cryptocurrency $WAP.
The crypto wallet address rapper Cardi B shared while shilling WAP tokens that reportedly belonged to a famous crypto scammer.
Cardi B posted to her official X account a promotional message touting WAP. WAP is a cat-themed meme coin that co-opts the name of the rapper’s hit song. Message included a video of WAP’s mascot – an animated cat – alongside a wallet address. Crypto security analysts have identified the address as a figure tied to prior nefarious activity in the cryptocurrency market. This has raised concerns about the endorsement and potential risk to investors.
The investigation has revolved around charges that the $WAP token was part of a “pump and dump” scheme. According to the SCA, the token was manipulated by promotional activities through key opinion leaders and insiders. They were allegedly paid to pump up the cryptocurrency on different social platforms. These kind of wrongdoings are not new. Recently, the Federal Bureau of Investigation has played a big mind game by launching a fake crypto token called NexFundAI to expose large-scale crypto pump-and-dump scheme.
According to reports, promotional activities included a network of influencers who, in turn, received hefty chunks of the $WAP token for free.
Analytics firm Bubblemaps suggested that, in this case, heavy bundling of supply and strategic sales drove the token’s price up before the insiders offloaded their inventory at the loss of retail investors.
Several social media accounts were reportedly involved in the scheme, according to an investigation that alleged coordination had been in place to influence or manipulate the market valuation of the token.
UAE Probes Crypto Token Promotion: Potential Securities Violations
Specifically, the results of SCA identify that promoters and traders of $WAP have violated various provisions of the UAE and US securities laws related to market manipulation and non-disclosure of financial interest. These violations can result in severe punishment, including heavy fines, a ban on trading, and even criminal charges against the perpetrators if proven.
UAE is, on the other hand, very crypto friendly. Just recently, OKX announced that it officially launched its trading platform in the United Arab Emirates to all retail and institutional investors after acquiring a full operating license.
Cardi B and other influencers’ involvement have made this investigation that much more complex. In the cryptocurrency market, it’s not uncommon for tokens that celebs endorse to rapidly increase in price. This provides room for manipulative practices that may be hard for regulators to uncover in real time.
Furthering the investigation, the SCA has written to X for information relating to accounts promoting $WAP. It is now calling on the cooperation of US regulatory bodies such as the SEC to ensure an in-depth investigation of the allegations.
A Case for Tighter Oversight
The probe into $WAP underlines some persistent areas of concern in cryptocurrency market regulation. Celebrities such as Cardi B and social media influencers often shill tokens. Tokens can easily be hyped up and gather market momentum, which might also make them easy targets for pump-and-dump schemes. Besides hurting individual investors, such schemes reduce public trust in digital assets.
This case thus gives a strong signal for increasing regulatoins regarding the social promotion of cryptocurrencies by public figures.
It raises questions about the responsibilities of social media platforms about proliferating the product promotion with fraudulent intent. As the SCA and other regulators dig deeper, increased regulation of cryptocurrency markets to protect market integrity may be near.
This case could set a precedent for cases involving the promotion of crypto by celebrities such as Cardi B. It may also trigger increased regulation and more caution from influencers regarding the advocacy of cryptocurrencies.
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