YooldoGames (Yooldo), developed by domestic game company Catze Labs, said that the more than 90% plunge in the "ESPORTS" token, a virtual asset, was the doing of one partner company, but it has not taken legal action such as filing a complaint even though the culprit has been identified. When the coin plunged, the virtual asset industry raised suspicions of an insider rug pull (investment withdrawal fraud).
On the 2nd, Yooldo announced on Social Networking Service (SNS) X (formerly Twitter) that "we confirmed that one of the market making (MM) partner companies engaged in activities with a different intent from the contract it signed with Yooldo. We judge that a substantial portion of the sell orders at the time came from that partner."
From 6 p.m. on May 25, more than 197.8 million units—43% of the total circulating supply—of the ESPORTS token were sold over four hours, sending the price down by more than 90% from $0.7 to $0.05. The ESPORTS sold were exchanged for 20,401 BNB coins. That amounts to about $13.65 million (about 20.5 billion won).
When price rigging or hacking incidents occur with virtual assets, project teams identify the cause as quickly as possible and announce follow-up measures. Yooldo revealed the cause only after a month.
There is no fixed legal standard for MM holdings; they are flexibly determined by contract terms with the issuer. Typically, MMs are entrusted with about 5% to 15% of the total circulating supply to place in the order book. In the industry, some say it is hard to accept that the issuer did not know or did not check that a partner held nearly half of the total circulating supply.
Yooldo has not taken any particular legal action even though the culprit has been identified and the damage amounts to about 20 billion won. In contrast, Humanity Protocol, the issuer of the Humanity (H) token, which suffered about 55 billion won in damage in a hacking attack last month, worked with law enforcement to investigate and recover the stolen funds.
A virtual asset industry official said, "Even if the culprit is unknown, it is common to ask law enforcement to investigate to manage the situation. It is hard to understand why no legal action is being taken even though the culprit has been identified."
Yooldo said that tracing the full path is difficult because the flow of funds from the ESPORTS supply appears to have passed through multiple wallets and exchanges.
There are also allegations that Shin Do-heon, CEO of Catze Labs, which developed Yooldo, is connected to Yooldo. A photo of CEO Shin was posted on Yooldo's official X account in Feb., and one of Yooldo's major investors said Yooldo's CEO is "CEO Shin." Catze Labs' English website introduces Yooldo as "our flagship platform that connects existing games and the Web3 world."
In Oct. 2024, the website of MetaMask, a virtual asset wallet service, carried an article introducing Yooldo, and the author's name was "Shin Do-heon."
A Catze Labs official said, "Yooldo posted on its X account a photo from a briefing at an overseas event attended by CEO Shin," adding, "Catze Labs is not related to the ESPORTS token price plunge, sell-off, price movements, or insider price rigging suspicions."