Newly launched Venice AI’s VVV token nosedived as much as 50% as insider trading allegations led to a drop in early sentiment for the hyped product.

Venice AI launched on Monday as an AI platform on the Base network that allows users to access China’s DeepSeek with a layer of privacy. It zoomed to a $1 billion market capitalization from a starting cap of $20 million on Monday on its appeal of offering private, uncensored AI inference access without per-request fees.

It was also listed on Coinbase (COIN) on its first day — becoming one of rare assets listed on the exchange on the day of launch — which may have helped propel the move. But sentiment took a hit Tuesday night on reports of insiders making millions of dollars from the launch.

Two contributors of launch partner Aerodrome Finance purchased a hoard of tokens shortly after it went live on the platform — but before any public announcements — with the position going from $50,000 to $1 million under an hour.

https://x.com/chadderbiz/status/1884249914697474400

Aerodrome suspended the two contributors after community backlash: “The timing of a small percentage of the trading activity around the $VVV launch was flagged by internal monitoring in less than 30 minutes – triggering an internal investigation.”

“This investigation resulted in suspending two contributors within three hours of launch. We are continuing the investigation and will take all appropriate further action,” the team said.