The price of the Grok memecoin crashed by 74% over the weekend following accusations that the token’s social media accounts were recycled from a previous scam project.
Grok, which drew its name from Elon Musk’s recently announced AI initiative also called Grok, had surged over 30,000% after launch. But blockchain sleuth ZachXBT revealed the token’s online presence was copied from a failed 2021 memecoin called ANDY.
Shortly after ZachXBT’s exposé, Grok plunged from its all-time high of $0.027 down to $0.007 within five hours. The Grok development team tried to restore confidence by burning 90 million tokens worth $2 million.
At its peak, Grok reached a market cap of nearly $200 million as traders piled in to ride the hype around Musk’s AI project. But the allegations of recycled social accounts from an old scam project quickly unraveled the memecoin’s meteoric rise.
The Grok case exemplifies the risks in chasing hot new memecoins tied to celebrity projects or current events. With no fundamentals beyond the hype and social media buzz, memecoin prices can easily crash once that hype diminishes or gives way to negative revelations.
It remains to be seen whether Grok can recover from this scandal, but the huge 74% plunge after just a week of trading highlights the extreme volatility inherent to these speculative assets. Investors should exercise extreme caution before buying into unproven memecoins based on hype alone.
