The UAE Securities and Commodities Authority launched an investigation on $WAP, a Solana-based token promoted by Cardi B. The case surrounding Cardi B and the $WAP token has once more highlighted ongoing concerns about celebrity-endorsed tokens and their impact on the broader market.
Last week, American rapper Cardi B was in the spotlight for allegedly promoting a fraudulent meme coin called “$WAP.” An investigation revealed that the crypto wallet address shared by Cardi B in her post may belong to a known crypto scammer.
In a post shared on Cardi B’s official X (Twitter) account on October 8, there was a video promoting the $WAP token and a wallet address.
Now, the UAE’s Securities and Commodities Authority has started an inquiry for potential securities violations regarding $WAP
The investigation followed a formal complaint filed by a Dubai-based venture capital firm and local Emirati investors. The firm said the team behind $WAP participated in market manipulation and fraud while promoting and trading $WAP.
Cardi B’s $WAP tanks amid investigations
Last week, PeckShield issued a warning stating, “Cardi B’s X account seems to be compromised.” The entity advised users to exercise caution when engaging with any links or addresses associated with the post.
The video post also seemed to target fellow rapper Iggy Azalea, who recently introduced her own token, MOTHER, and who alleged on X that $WAP might be a scam. In response, the $WAP account then shared a video of Cardi B endorsing the token.
The UAE government has taken it upon itself to protect its citizens from fraudulent investigations. It is all part of the UAE and its economic district’s plans to make the region the leading global crypto hub.
The investigation has focused on allegations that the $$WAP token was part of a “pump and dump” scheme. According to the SCA, the token was manipulated through promotional actions involving key opinion leaders and insiders. These KOLs were allegedly paid to promote the coin on various social media channels.
The coin has since tanked. According to on-chain data from CoinGecko, $WAP is currently worth $0.01282, an 8.7% decline in the last hour and a 39.5% decline in the last 24 hours.
Source: CoinGecko
The SCA’s findings indicate that $WAP promoters and traders have breached multiple provisions of UAE and US securities laws concerning market manipulation and the failure to disclose financial interests.
Such infractions can lead to significant repercussions, including heavy penalties, trading restrictions, and criminal charges for those found guilty.
The SCA is stepping up its investigation by reaching out to X for details concerning accounts endorsing $WAP. The situation now necessitates collaboration with US regulatory authorities, including the SEC, to facilitate a thorough investigation into the allegations at hand.
Celebrity-backed memecoins defraud investors
The investigation into $WAP highlights certain recurring areas of concern in crypto market regulations. Celebrities like Cardi B and social media influencers frequently shill tokens. Then, these tokens ride the hype and gain market momentum, making them potential targets for pump-and-dump scams.
These kinds of crimes are not new. The Federal Bureau of Investigation recently carried out a honeypot scheme by inventing a fake crypto token called NexFundAI to reveal a large-scale crypto pump-and-dump operation.
Aside from harming individual investors, such schemes undermine public trust in digital assets. Many of these projects have been criticized for lacking substantial development, leading to skepticism about their authenticity and intentions.
Notably, Cardi B’s and other influencers’ involvement in the crypto market makes the UAE investigation even more complex.
