ZachXBT has accused influencer Zion “Ansem” Thomas of orchestrating a series of memecoin “pump and dump” schemes, in what seems like one of X’s worst fights.
ZachXBT claimed that Thomas was involved in pushing a variety of low-cap Solana (SOL) memecoins to his followers during a contentious discussion on X on October 5.
Renowned crypto investigator ZachXBT is well-known for his on-chain analysis and for exposing fraud and unethical behavior in the cryptocurrency space.
The entire controversy erupted when prominent cryptocurrency figure Murad Mahmudov’s comment sparked debate on meme currencies’ rise in the current market cycle. Andrew Kang of Mechanism Capital speculated on Twitter that Mahmudov’s remarks may have set off a fresh wave of memecoin investments, which set off a furor. Things quickly heated up when ZachXBT intervened.
However, the highlight of the entire controversy resided in the fact that Ansem shielded himself by claiming that it was far “better” for him to call out Dogwifhat (WIF) to his followers at a $100,000 market cap, which eventually surged to a high value of $4.8 billion in March than it was to support a utility-based token like Chainlink (LINK), which is down 90% compared to Bitcoin year-to-date.
In retaliation, ZachXBT said that Ansem was pushing “hundreds” of low-cap coins, such as those from pop singers Davido and Jason Derulo, as well as several famous memecoins, such as BODEN, HOBBES, ZEUS, and WYNN.
What Are Crypto Pump And Dump Schemes?
A cryptocurrency pump-and-dump plan entails promoting or engaging in whale activity to artificially inflate the value of a token in order to draw in additional purchasers.
The inflated asset is subsequently sold at a profit, removing the coin’s liquidity and causing the price to plummet.
Typically, pump and dump schemes consist of four parts: pre-launch, launch, pump, and dump. The purpose of the first three phases is to induce fear of missing out on investments in investors.
ZachXBT’s Accusations Come As Crypto Pump And Dump Is on Rise
ZachXBT’s accusations come at a time when the “pump-and-dump” scheme has been used by many to reek illegal profits in the market.
A recent report by Chainalysis shows that 54% of ERC-20 tokens listed on DEXes in 2023 show patterns that could indicate pump-and-dump schemes. Less than 14.1% of all tokens that are issued in a particular month get significant traction and just 5.7% of tokens launched in 2023 are currently above a $300 of DEX liquidity level.
Even though this is an improvement over the last two years, low liquidity values indicate that most tokens that are introduced still have a large impact on their pricing when they are traded for liquid assets like ETH, wETH, USDC, USDT, and wBTC.