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▲ Virtual Assets, Cryptocurrency Trading, Retail Investors, Institutional Investors/ChatGPT Generated Image
Criticism has been raised that the virtual asset listing structure led by Venture Capital (VC) was designed to systematically absorb funds from retail investors.
In a video released on April 19 (local time), Louis Raskin, host of the cryptocurrency-specialized YouTube channel Coin Bureau, pointed out that the current token listing method is structurally designed to help insiders realize profits. He analyzed that institutional capital, which created early success stories like Bitcoin (BTC), has now sophisticatedly built a system to absorb funds from retail investors.
In particular, the low-circulation structure, which circulates only 12.3% of the total supply when a new token is listed, was identified as a core problem. With a limited supply, scarcity is artificially highlighted, driving up prices, and the remaining 87.7% is released into the market at the time of lockup release, creating strong downward pressure. This process repeatedly traps retail investors at high prices.
Analysis suggests that initial demand is also closer to planned marketing rather than organic generation. Market makers, who borrow tokens from projects, place phantom orders on the order book to make transactions appear active. Indeed, with a significant portion of trading volume on major exchanges suspected of being wash trading, investors are prompted to buy based on distorted data. Aggressive marketing, mobilizing influencers and PR agencies, also serves to reinforce this trend.
Insiders secure profits in various ways even before lockup release. They pre-empt price drop risks through private sales via over-the-counter (OTC) transactions or by establishing hedge positions in the futures market. Cases of avoiding on-chain tracking by using wallet distribution or cross-chain transfers are also frequent. It is pointed out that such a structure effectively eliminates venture investment risk and transfers that burden to retail investors.
The movements of judicial authorities are also becoming full-fledged. Investigative agencies, including the FBI, are classifying such market manipulation as a serious felony and intensifying crackdowns. Recently, there have been cases where individuals involved were sentenced to imprisonment for wire fraud, indicating a trend of increasing regulatory intensity. Authorities are focusing on the act of defrauding investors itself, rather than on whether tokens constitute securities, as they continue law enforcement.
Market analysis also suggests that the impact of lockup releases, as seen in cases like World Liberty Financial (WLFI) and Mantra (OM) where supply is concentrated among a few, is repeatedly occurring. With large-scale lockup releases scheduled for the coming years, market volatility is likely to increase further if new capital inflows are insufficient to absorb them.
Investors need to pay attention to the token's distribution structure and insider lockup release schedules rather than flashy marketing. As long as information asymmetry is not resolved, the fund outflow structure will inevitably repeat, and the ability to select structurally weak projects is emerging as a key variable determining investment performance.
*Disclaimer: This article is for investment reference purposes, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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