Controversial cryptocurrency project Worldcoin is under renewed criticism over allegations of insider trading and market manipulation. One chain detective calls the project “the biggest scam token of the bull run.”

According to DeFi Squared, only 2.7% of WLD tokens are currently in circulation. The fully diluted market value of Worldcoin, which is the 103rd largest cryptocurrency with a value of $648 million, is $22.4 billion.

This means that of the total supply of 10 billion WLD, only 288.9 million are currently on the market. Additionally, as Into The Block noted earlier this month, this is extremely bad news for existing investors:

If the price of Token A is $1 but only 10% of its total supply is in circulation, its market value is calculated based on the circulating supply only. Once the remaining 90% tokens are put into circulation, the overall value must increase significantly to maintain the price of $1 per token. In essence, as more tokens come into circulation, the value of each token becomes diluted.

While the underlying concept of Worldcoin’s tokenomics is understandable to some extent, it can be a bit disturbing. Anyone from around the world can sign up to have their irises scanned. In return, they get a digital ID and some free WLD.

According to Worldcoin’s latest estimates, more than six million people have signed up worldwide — compared to a global population of 8.1 billion people. This may help explain why so much crypto is not yet in demand.

But DeFi Squared’s concerns are based on claims that the Worldcoin team “controlled the price, ensuring it still has a fully diluted valuation of $30 billion.” It is claimed that 100 million tokens were allocated to market makers. In addition:

Allocating supply to market makers is common in the industry.

The analyst claimed that “the majority of the ecosystem exists solely for VCs” and said the timing of the good news coincided with expansions intended to keep the token price purposely high.

One good news regarding Worldcoin developer Tools for Humanity is that 80% of the tokens held by the team and investors will be released over a longer time frame. This aims to address the previous dilution issue. DeFi Squared announced that they plan to “take a short position in WLD in the months following the releases.”

A spokesperson for the project strongly denied the allegations made in this article and said:

The Worldcoin Foundation and its contributor Tools for Humanity take any allegations of insider trading, even without justification, seriously and have zero tolerance if such activity occurs. Many countries around the world have permanently or temporarily banned Worldcoin due to data protection concerns.

Regulators claim potential users are not given detailed information on how biometric information will be processed, there is no mechanism to withdraw consent, and the technology could harm children. The Portuguese Data Protection Authority said:

“Minors are particularly vulnerable and may be less familiar with the risks, consequences and guarantees regarding the processing of their personal data and their rights.”