The YZY memecoin, launched by Kanye West on Solana in August 2025, epitomizes the volatile and often exploitative nature of celebrity-backed crypto projects. Within hours of its debut, the token surged to a $3 billion market cap before collapsing by over 90%, leaving 73.8% of investors with losses totaling $74.8 million [1]. Yet, a small group of wallets—particularly those linked to Hayden Davis, a figure notorious for his role in tokens like MELANIA and LIBRA—secured outsized gains. Davis’s 14 linked wallets, pre-funded with cross-chain transfers and exchange withdrawals, generated $12 million in profits within minutes of the token’s announcement [2]. This case study reveals how structural flaws, centralized control, and coordinated manipulation created a winner-takes-all dynamic, where a handful of actors profited at the expense of millions of retail investors.
The Mechanics of Manipulation
YZY’s launch was engineered for insider advantage. A single multisig wallet controlled 87% of the token supply before dispersal, while 94% of the initial allocation was pre-distributed to insiders [3]. This hyper-centralized structure allowed early buyers to dominate liquidity pools and execute trades at favorable prices. For instance, one wallet spent 450,611 USDC to acquire 1.29 million YZY tokens at $0.35 each, later selling 1.04 million for 1.39 million USDC—a $600,000 profit in under 24 hours [4]. Such tactics were compounded by the token’s design: a 1% base fee, slippage from wide bin steps, and no clear utility or governance model [5]. These features inflated transaction costs for retail traders while enabling insiders to arbitrage price swings.
Winner-Takes-All Outcomes
The disparity in returns was staggering. While the top 10 wallets extracted over $18 million from YZY’s launch [6], 83% of 60,000+ wallets ended up in the red [7]. One insider turned $450,000 into $3.37 million in a single day, while over 51,000 traders collectively lost $74 million [8]. This imbalance underscores the risks of unregulated celebrity projects, where hype and influence mask opaque tokenomics. The U.S. SEC has since launched an investigation into potential market manipulation, with regulators citing YZY as a textbook example of a “pump and dump” scheme [9].
Lessons for Investors
YZY’s collapse highlights systemic vulnerabilities in the memecoin ecosystem. First, celebrity endorsements often prioritize marketing over fundamentals, creating speculative bubbles. Second, centralized token distributions and high fees disproportionately benefit early insiders. Third, the lack of regulatory oversight enables coordinated sniping operations, as seen with Davis’s wallets [10]. For investors, the takeaway is clear: due diligence must extend beyond price charts to scrutinize tokenomics, on-chain activity, and governance structures.
In the end, YZY’s story is not just about a failed token—it’s a cautionary tale about the winner-takes-all dynamics of modern crypto markets. As regulators and investors grapple with the fallout, the question remains: how many more projects will follow YZY’s volatile blueprint before systemic reforms take hold?
Source:
[1] 74% of Kanye West’s YZY Investors Lost Money, Bubblemaps [https://finance.yahoo.com/news/74-kanye-west-yzy-investors-073000885.html]
[2] Memecoin Volatility and Market Manipulation: The YZY Token Case Study [https://www.ainvest.com/news/memecoin-volatility-market-manipulation-yzy-token-case-study-2508/]
[3] Hayden Davis allegedly sniped Kanye West’s YZY token to … [https://finance.yahoo.com/news/hayden-davis-allegedly-sniped-kanye-214526584.html]
[4] Kanye West’s YZY Token Launch Flagged for Insider … [https://www.mexc.com/news/kanye-wests-yzy-token-launch-flagged-for-insider-trading-activity/69114]
[5] Celebrity Token Vulnerabilities and Market Manipulation Risks: YZY Case Study [https://www.ainvest.com/news/celebrity-token-vulnerabilities-market-manipulation-risks-yzy-case-study-2508/]
[6] $23M Extracted by $YZY and $LIBRA Insider Wallets [https://phemex.com/news/article/23m-extracted-by-yzy-and-libra-insider-wallets-onchain-analysis-reveals_15752]
[7] Kanye’s YZY Crypto Crash Leaves 60000 Wallets in Red [https://www.bitget.com/news/detail/12560604935169]
[8] Kanye West’s YZY Token: 51000 Traders lost $74M [https://cointelegraph.com/news/kanye-west-yzy-token-crash-51000-traders-losses]
[9] Memecoin Volatility and Market Manipulation: The YZY … [https://www.ainvest.com/news/memecoin-volatility-market-manipulation-yzy-token-case-study-2508/]
[10] Latest YZY MONEY (YZY) Price Analysis [https://coinmarketcap.com/cmc-ai/yzy/price-analysis/]