What Happened: A new cryptocurrency called CluCoin gained 1000% in its first day of trading, quickly drawing interest from investors from across the world.
10x DAY 1 – 1000x SOON 📈 pic.twitter.com/yrVWticnkm
— CluCoin (@CluCoin) May 20, 2021
The project describes itself as a “hyper deflationary token with a smart staking system” and rewards holders with half of a 10% tax obtained from sellers of the token – a concept not too different from SafeMoon’s reward system.
Founded by a gamer known as DNP3, CluCoin attracted support from many across the gaming and crypto community.
Congratulations @Fat_Blasian you won $1,000. Also congrats to all of the @CluCoin holders!! You’ve already 3x’d your investment to help charities. 🚀
— DNP3 (@DNPthree) May 20, 2021
Congrats @DNPThree! What a launch! @CluCoin to the moon! 🚀 #CluCoin
— MSF Sceptic (@Sceptic) May 20, 2021
In order to purchase CluCoin, users will have to use the PancakeSwap decentralized exchange which is currently the only exchange where the tokens have been made available.
Why It Matters: Although the project claims to have already acquired over 20,000 holders and over $125 million in market cap in less the 12 hours, some investors sounded caution about the new project.
“Much like the old school ‘pump and dump’ penny stocks which feature in the Wolf of Wall Street, these crypto tokens are hyped up on social media in an attempt to inflate the price,” Charlie Burton, an investment specialist at Finder told The Sun.
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“The idea is that the early investors and founders of these coins pump up the price to make a lot of money, and then get out before the house of cards comes falling down.”
According to one user, the largest wallet holds 47% of the tokens and the second and third largest wallets own 10% each.
Despite the skepticism of some, however, many believed that the coin’s founder would be unlikely to risk his reputation and pull liquidity from the project.