The world of cryptocurrency was recently shaken by the PSYOP token scandal, where early investors reportedly lost over half of their funds.
The story broke when Lookonchain reported that several traders who had participated in the PSYOP presale received airdrops now worth half of their investment.
The case of the PSYOP token offers a stark reminder of the risks that come with investing in new and untested cryptocurrencies. The token's presale investors, who hoped to profit from early involvement, instead found their investments dramatically reduced.
For instance, one investor who had spent 29 Ether (ETH) in the presale received over 5 million PSYOP tokens as an airdrop. These airdropped tokens are now worth less than 3 ETH, representing a loss of over 90%. Other top participants in the presale faced similar outcomes, with their investments in ETH yielding far less in PSYOP tokens than expected.
The problem extended beyond the presale. Trading the token also proved to be a losing proposition. One investor purchased 3.97 million PSYOP for 2.28 ETH, but when they sold the tokens, they only received 2.2659 ETH. On top of this, they had to pay a gas fee of 0.052 ETH, further deepening their losses.
In response to these losses, the token creator, known as Ben.eth, promised more airdrops. However, it remains unclear how this will help investors recoup their losses. After a second round of airdrops, the same address that initially invested 29 ETH in the presale received an additional 25.5 million PSYOP, but these were worth only 14 ETH.
Token Dubbed a Scam
As the losses mounted, many community members began to label the PSYOP token a scam. A media studio called Psyop, which some community members had linked to the token was quick to distance itself from the controversy. The studio categorically described the PSYOP token as a scam, denying any association with it.
Community warnings about the token also proliferated, with one user, ZachXBT, tweeting about the unreliability of the project's founder. The hype surrounding the token even led to the launch of several similarly named assets, prompting Ben.eth to issue a disclaimer stating that he had yet to release a token.
The unfolding scandal has not only damaged investor trust but also caught the attention of legal authorities. Mike Kanovitz, a partner at the law firm Loevy & Loevy, announced on May 20 that his firm would be filing a class-action lawsuit against the PSYOP token founder if he failed to refund presale participants.
The letter indicated that Ben.eth could face charges of racketeering, wire fraud, and misleading investors. It further suggested that investors could potentially receive up to $21 million in damages.
It's worth noting that Ben.eth is reported to have made over $7 million from the presale. He also made several claims about the PSYOP token, including linking it to a person named Andrew Tate.
This incident serves as a cautionary tale for potential investors in the burgeoning field of cryptocurrencies. It highlights the importance of thorough due diligence and the need for clear regulatory oversight in the sector.
As the PSYOP token case continues to unfold, stakeholders worldwide will be watching closely, hoping for measures to prevent such incidents in the future.
Legal Threat and Response
Following the controversy and allegations of scam, a law firm named Loevy & Loevy issued a statement on May 19th, warning the creator of PSYOP, Ben.eth, of impending legal action.
The firm's attorney, Kanovitz, alleged that Ben.eth had deliberately misled token buyers, broken promises, and mismanaged liquidity pools. He pointed out that the PSYOP tokens were gradually released, as confirmed by tweets admitting that 90% of the token allocation remained unreleased.
This slow release process could result in Ben.eth having to pay $21 million in damages, which exceeds the $7 million initially raised in the PSYOP sale.
Should Ben.eth fail to comply with the attorney's requests, the law firm intends to proceed with a class-action suit in Arizona.
In response to the legal threat, Ben.eth dismissed the claims from the law firm and ridiculed it for being "unprofessional" due to its casual tone and typos.
He also criticized Kanovitz for sending the letter as a non-fungible token on the Ethereum blockchain. Meanwhile, PSYOP faces other challenges.
A media studio with the same name denounced the token on May 19th, while a scammer attempted to imitate the PSYOP token launch through a phishing scheme. Despite raising $7 million, the meme coin is regarded as having little credibility.
The PSYOP token scandal underscores the inherent risks associated with investing in cryptocurrency, particularly those new to the market. It serves as a potent reminder for potential investors to exercise caution and conduct thorough research before investing in any cryptocurrency (especially meme coins).