The Securities and Commodities Authority (SCA) of the United Arab Emirates is investigating alleged securities law breach concerning the digital asset WAP. This Solana-based token pushed by a celebrity, Cardi B, raised much concern.
The investigation began after a significant venture capital firm from Dubai and local Emirati investors filed complaints. These complaints highlighted alleged market manipulation and fraudulent promotional schemes associated with the WAP token.
Cardi B’s Endorsement
Cardi B’s promotion of the WAP token has stirred controversy in the crypto space. As reported earlier, the rapper shared a promotional post on her official X account, showcasing a WAP cartoon mascot alongside a crypto wallet address tied to the token.
Analytical platform PeckShield revealed on October 8 that Cardi B’s wallet address had been linked to a notorious figure in crypto fraud. This link has caused much concern among investors, as it risks the token and, therefore, questions its authenticity.
Pump-and-Dump Allegations
The SCA is probing whether WAP participated in a ‘pump-and-dump’ scheme. This scheme manipulates the value of a token through incentives and insider trading. Once its value has skyrocketed, it dumps a large amount of the token.
Crypto Hacks Decline in Q3, Asset Thefts Surge to $753MIf all the allegations are proven, the people involved in the WAP promotion campaign could be in big trouble. Possible sanctions include fines, bans, or suspensions from engaging in trade, or other forms of business. One could also be apprehended on charges of market manipulation and failure to disclose interest.
International Regulatory Cooperation
The SCA has also written to US regulatory authorities, such as the Securities and Exchange Commission (SEC), to assist in the investigation. Coordinated actions are being taken to assess the full scale of the possible violation of the law.
This case also shows that the dangers posed by celebrity-backed cryptocurrencies are rising. Tokens backed by influencers like Cardi B can become popular very quickly. However, this rapid rise also exposes the campaign to potential scams. As the regulators continue to probe into the matter, this could mark a new frontier for enhanced legal requirements.
