Swarms, the AI project, has leveled serious allegations against SongShu, a former representative of the Swarms AI Foundation’s DAO, claiming market manipulation and presentation of false information to investors.
Swarms stated in a community post from its official X account that SongShu aggressively removed material DAO members from the internal chat, related communications, and then used a launchpad-type tool named SSI fun to defraud investors.
The foundation asserts that, as an organization, it provided resources for the SSI launch, including design resources and technical support, and that SongShu withheld payments while simultaneously attempting to disrupt the community for personal gain.
SongShu Defends Himself Amid Controversy
SongShu provided his own account of the events in response to the allegations, stating that when Swarms’ value dropped to approximately $30 million, the funds were moved to the foundation’s account for safekeeping.
He also claimed that Kye, the developer from the Swarms team, had threatened the SSI Fun team to return a 10% handling fee.
SongShu asserted that he personally had invested $2 million and $3 million into Swarms and that he is losing money by running it.
Notably, the counterstatement by SongShu aggravates the conflict by exposing divisions and competing narratives in the project.
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SWARMS Token Nosedives
In the wake of the allegations, Swarms’ token has seen significant volatility. The Swarms (SWARMS) token is currently trading at $0.0221, with a 24-hour trading volume of more than $5.8 million at this time.
This represents a -4.03% dip in the past 24 hours, despite the token currently showing a +10.26% for the week.
With a circulating supply of 1 billion tokens, Swarms has a market capitalization of $22 million.
While the project has maintained investor interest despite all of this, the ongoing, publicly visible controversy raises questions about governance, transparency, and sustainability.
Broader Pattern of Crypto Manipulation Cases
The controversy surrounding Swarms is not unique to the cryptocurrency space. Last year, a South Korean Court sentenced a professional golfer and former CEO of Bithumb (one of South Korea’s largest exchanges) to prison for bribery and manipulation of the price of an altcoin, UnoCrypto reported.
This case illustrated how deeply rooted market manipulation can be within the digital asset space, leading regulators in South Korea and elsewhere to increase their scrutiny.
There have been similar cases elsewhere that highlight how investors can fall prey to situations in which influential individuals misuse their status to influence the price of tokens and deceive the marketplace.
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Global Crackdown on Market Misconduct
Governments globally keep tightening regulations to curb market manipulation, especially in the crypto space.
On March 20th, Aleksei Andriunin, the creator of Gotbit Trading Company, also known simply as Gotbit, agreed to pay $23 million and will not go to jail after the U.S. regulators accused him of creating fake trading volume and also creating fake token price increases with automated bots, according to UnoCrypto.
Experiences like that, coupled with the most recent Swarms situation, further highlight the increasing dangers that investors are confronted with in an industry that lacks accountability at the top.