Base, a layer-2 blockchain supported by Coinbase, has found itself in hot water after a token it promoted saw a drastic 95% crash shortly after launch, only to recover later on.
The controversy started on Apr. 16 when Base made a post on Zora, a platform that turns posts into tokens. The post, stating that “Base is for everyone,” was quickly followed by an announcement from the official Base X account linking to the Base for everyone token page on Zora. The token saw a rapid surge, reaching a market cap of $17 million. However, the excitement was short-lived as the token crashed by 95%, erasing over $15 million in value.
The sudden drop sparked immediate criticism, with many accusing Base and Coinbase of promoting a risky memecoin. It was revealed that insiders, holding a significant portion of the token supply, sold off their tokens after the post generated interest, leading to the sharp decline. Suspicious transactions by three wallets were also flagged, indicating potential insider trading activities that resulted in profits of over $666,000.
In response to the backlash, Base issued a public statement on Zora, clarifying that the token was not an official network token for Base or Coinbase. Instead, it was part of a creative experiment on Zora to bring content on-chain. The team expressed their desire to explore tools that enable the sharing of memes, moments, and culture openly on the blockchain.
Despite the explanation, many in the crypto community felt deceived and called for clearer communication from Base before the token launch. Base continues to focus on “contentcoins,” its initiative to tokenize digital content. However, skepticism remains among traders, who are advocating for greater accountability from major platforms.
As of now, “Base is for everyone” holds a market cap of $13 million and a 24-hour trading volume of $37 million on Zora. The token creator has earned over $74,000 from trading activities and Zora’s creator rewards.
Overall, the incident serves as a reminder of the risks associated with investing in cryptocurrencies and the importance of transparent communication in the crypto space. Investors and users are urged to conduct thorough research and exercise caution when participating in token offerings and trading activities.
