In a move that signals tighter oversight of the crypto sector, the UAE has recently intensified its regulatory stance. The latest development sees the country launch an investigation into the $WAP token, which is backed by rapper Cardi B, whose popular song bears the same name. According to a notification about the Solana-based token, it is being investigated by the United Arab Emirates for possible securities violations.

The United Arab Emirates’ Securities and Commodities Authority (SCA) has launched an investigation into the crypto token, suspecting it could be part of a pump-and-dump scheme waiting to be exposed. The SCA has alerted the token to what it describes in its notice as a “prominent Dubai-based venture capital firm” and associated Emirati investors.

WAP token and doubts about it

With an animated cat as its mascot, the WAP token falls into the category of memecoins with a circulating supply of one billion tokens, according to CoinGeck. While the exact release date of this token remains unclear, its official X page was created in September of this year.

In recent weeks, Cardi B, who boasts more than 35 million followers on X, has begun promoting the $WAP token on her social media platforms. On October 8, she shared a promotional post along with the wallet address.

According to CoinTelegraph, a blockchain researcher named Wazz flagged the wallet address posted by the WAP site as being linked to multiple crypto scams.

Soon after, blockchain data platform BubbleMaps claimed that WAP tokens worth $500,000 (roughly Rs. 4.20 crore) were suspiciously dumped hours after the launch. BubbleMaps also said that the WAP token is highly correlated – which could force buyers to buy multiple units of the asset in a single transaction.

These factors have raised concerns among investors and blockchain watchdogs, suggesting that memecoin could be in trouble.

UAE position on WAP token

In its notice, the SCA said the token’s promoters, including Cardi B, engaged a network of paid individuals who received the tokens for free through undisclosed financial arrangements.

According to the SCA, “Preliminary investigations suggest that insiders associated with the $WAP token, along with various paid key opinion leaders, are orchestrating a clear pump and dump scheme. This scheme involves artificially inflating the price of SWAPs through strategic promotions, followed by systematic selling of their holdings, thereby inflicting significant financial losses on unsuspecting retail investors.”

UAE authorities have joined forces with BubbleMaps to conclude that this token violates US as well as UAE securities laws.

Cardi B has not yet reacted to the development.

Earlier this week, the Virtual Asset Regulatory Authority (VARA) in Dubai issued a cease and desist order to seven crypto entities for conducting their business without obtaining the necessary approvals.