Weekly Market Highlights Review: MOVE Crash and Underlying Manipulation in Web3, AI and PayFi Entering Acceleration Phase

This week, the cryptocurrency market has seen a strong rebound, with significant gains in Ethereum’s ecosystem and AI-related projects, both exceeding 20%. However, internal turmoil has resurfaced within the industry, as a certain project experienced a price collapse due to issues with its market-making agreement, involving multiple parties in the manipulation, which has sparked a reflection on industry ethics and regulation. Meanwhile, the AI and payment finance sectors are accelerating their development, with a public chain promoting new standards and several trading platforms laying out payment ecosystems. Coupled with policy trends, this suggests that the cryptocurrency market is facing a new round of reshuffling and opportunities.

1. Project Event - Market Making Agreement Triggered Collapse

A certain project was suspended from trading and its airdrop was delayed this week, becoming a focal point of public opinion once again. This project previously raised over $40 million and was selected for a cryptocurrency investment portfolio supported by a certain political figure.

The manipulation suspicion is the core of the event, involving a market-making agreement between a certain company and the project foundation, which is accused of incentivizing price manipulation. According to media reports, the contract between the foundation and the market maker grants the latter control over about half of the circulating tokens and incentivizes it to inflate the token valuation to $5 billion before selling for profit. As a result, on the next day after the launch, 66 million tokens (worth $38 million) were sold off, causing a sharp drop in the token price.

After the incident broke out, the project party shifted responsibility with the market makers and founders. Currently, the project has entrusted a third-party agency to investigate the market-making anomalies, and several executives and legal advisors are under scrutiny, severely challenging the project’s credibility and governance.

This incident has exposed in detail the issues of inadequate regulation of market-making mechanisms and the lack of transparency in the legal framework for the first time. In theory, market makers should provide liquidity for new tokens, maintaining price stability and market depth. However, in practice, if there is a lack of regulatory or transparent mechanisms, market makers may be exploited as tools to manipulate the market and covertly transfer large amounts of tokens, harming the rights of ordinary investors and disrupting market fairness.

2. AI and Payment Finance

This week, a certain public blockchain officially launched a new protocol and AI support plan, aiming to provide developers with a standardized and secure AI integration framework, promote AI innovation in the Web3 ecosystem, and address blockchain data access and security challenges. The public blockchain will support the development of AI projects through hackathons, AI agent solutions, and incubator programs.

2024 is a breakthrough year for AI company financing. Nearly one-third of global venture capital is flowing into AI-related fields, making it the leading financing sector. Data shows that AI-related companies raised over $100 billion, a year-on-year increase of more than 80%, surpassing every year of the past decade.

The United States dominates AI financing, accounting for 46.4% of the value of venture capital deals in 2024, totaling approximately $97 billion, with nearly 4,000 transactions. It is expected that the number of Web3 AI projects will experience explosive growth this year, bringing new wealth opportunities and value creation space to the market.

In the payment finance sector, several trading platforms have launched new products focused on stablecoin payments and cross-border travel payment systems. These developments seem to confirm the potential of the payment finance sector, especially in the context of stablecoin regulatory compliance.

Three, Policy Regulation

1. A certain state has passed a strategic Bitcoin reserve bill, authorizing state treasurers to purchase Bitcoin. The bill allows the state treasury to invest up to 5% of its funds (approximately $280 million to $770 million) in precious metals and cryptocurrencies with a market capitalization exceeding $500 billion. This move marks the United States’ entry into the compliant investment field of cryptocurrencies, signaling that more states may follow suit. The bill will take effect in 60 days.

2. The U.S. Senate rejected the Stablecoin Innovation and Security Act with a vote of 48 to 49. The bill was originally intended to establish the first regulatory framework for stablecoins in the U.S., but it was not passed due to a lack of consensus on some provisions. The failure of the bill means that the U.S. stablecoin market will continue to operate under existing state-level regulations, lacking a unified federal framework, which may limit market growth and weaken the U.S.'s competitiveness in global digital finance.