UAE's Market Regulator Launches Probe Into Cardi B-Promoted $WAP Token Amid Manipulation Concerns

The Securities and Commodities Authority (SCA) of the United Arab Emirates has launched an investigation into the cryptocurrency token $WAP, developed on the Solana blockchain.

The Securities and Commodities Authority (SCA) of the United Arab Emirates has launched an investigation into the cryptocurrency token $WAP, which was developed on the Solana blockchain.

The inquiry was triggered by concerns of market manipulation and potential securities violations after the token was promoted by rapper Cardi B and other influencers. A Dubai-based venture capital firm and several Emirati investors filed complaints alleging fraudulent practices related to the token’s promotion and trading.

The $WAP token, which gained popularity as a meme coin, became the subject of the SCA's probe due to allegations of deceptive promotional tactics. These claims raised questions about the integrity of the token's market value, considering that several high-profile individuals were involved in its promotion, driving up interest among retail investors.

Pump-and-Dump Scheme Allegations

Authorities are investigating whether $WAP was part of a “pump and dump” scheme, where the price of the token was artificially inflated through coordinated promotional efforts before being sold off by insiders at a profit. Influencers reportedly received large amounts of $WAP tokens as compensation for their promotions, encouraging their followers to invest.

Analytics firm Bubblemaps suggested that large portions of the token's supply were held by insiders, who strategically sold their holdings to capitalize on the price surge. This type of market manipulation often leaves retail investors with significant losses as they buy into the token at artificially inflated prices.

Adding to the controversy, crypto security analysts linked a wallet address shared by Cardi B during the promotion to an individual who has been previously involved in crypto scams. This discovery raised further concerns about the legitimacy of the token and its promotion, leading to closer scrutiny by authorities.

SCA Requests Information from Social Media Platforms

As part of the investigation, the SCA has requested information from social media platform X (formerly Twitter) regarding accounts that promoted $WAP. This request aims to determine whether any undisclosed financial interests were involved in the promotion and whether the token's marketing efforts violated securities laws.

The SCA has also sought cooperation from U.S. regulatory bodies, including the Securities and Exchange Commission (SEC), as the case may involve cross-border violations. Celebrity and influencer endorsements of cryptocurrencies have come under increasing regulatory scrutiny, especially when such promotions contribute to market manipulation.

While celebrities getting involved in promoting digital assets is not uncommon, it poses risks to retail investors, especially if these tokens are part of schemes designed to artificially inflate their value. Authorities are focusing on the extent to which influencers were aware of potential wrongdoing in this case and whether they complied with regulations that require disclosure of financial incentives.

Potential Impact on Crypto Regulation

The investigation into $WAP highlights the evolving regulatory challenges posed by the cryptocurrency market, particularly regarding the role of influencers and celebrities. As the UAE positions itself as a crypto-friendly jurisdiction, cases like this may lead to increased scrutiny of promotional activities and stricter regulatory oversight.

The SCA's probe is expected to contribute to discussions on how to regulate cryptocurrency endorsements by public figures. This case could mendorong the development of clearer guidelines on how tokens are marketed and traded to protect retail investors from fraudulent activities.

As the investigation continues, the outcome may result in more stringent enforcement actions against those involved in the promotion of the $WAP token. It could also serve as a warning to other influencers about the risks involved in endorsing cryptocurrencies without conducting proper due diligence or disclosing any financial interests.