by Br. Alexis Bugnolo

This is the third article I have written regarding the problems with Stew Peter’s meme coin, Jproof. The first was a general warning against investing in cryptocoins, of which meme coins are those which are not Bitcoin. The second was the observation that one investor so outpaces the others in skill, that he has made nearly all of the net profits of all Jproof holders.

In this third report, I want to warn all who might someday think of investing in meme coins, which end up on the platform Meteora of the fact that a large number of AI programs appear to be controlling the market, to the advantage of the owners of the platform, not the owners of the meme coin.

Here, let me explain it.  If you got to jproof.ai and scroll down you find this display, when you click the word, “Traders”.  The first image is of the largest of the top holders, and the second image show the smallest of the top holders.

This is the list of all the major holders of the Jproof meme coin. Wanting to know who these are, I clicked the entry for each in the EXP column. This in turn reveals whether the account is a human being or a “System Program”.

The top account owns about 821 million jproof meme coins of the total 971 million.  I assume this is the initial investors’ account, or perhaps it is simply and only Stew Peter’s account. He has promised the public that he will never sell his jproof coins. And from what I can see from the ledgers, he has kept that promise and made no transactions after launching the coin publicly.

The other major holders, which are all system programs own 110 million coins. And the general public owns about 40 million coins.

And this information should worry the general public. Because if the general public owns 3 times less coins than “System Programs”, the “System Programs” have the ability to control the price of the coin.

Now, ethically speaking, I can understand that there has to be someone to sell the publicly offered tokens to the public, since Stew Peters is not selling his tokens. And I can understand that the platform which is offering the services of marketing and accounting would own some tokens in its own name, while managing the sale and purchase of the tokens to and by the public holders, who number about 3800.

But some of those “System Programs” I have found bought the meme coin when it was selling for 1/100th of a penny and are selling it at higher prices. Indeed, one of these “System programs” bought at low price and sold when the meme coin reached 14 cents.

And that is very troubling. Because, the “System programs” own so much of the jproof coin, that if they can enter the market and participate alongside human investors, that if their actions are not strictly limited and their participation held within bounds, the human investors could be too easily defrauded.

That there is even such participation violates the ethics of a crypto market in my opinion, because human investors could never compete with AI controlled accounts. And there is a conflict of interest if any of these “system programs” are in fact owned and operated by the accounting authorities, liquidity authorities or platform authorities which govern and oversee the market of jproof coins.

Ethically speaking, that is, only HUMANs should be allowed to transact meme coins. That guarantees that the decisions on investing are made in a context which is equitable to all investors. Thus whether you buy or sell, you should only be buying from or selling to another human investor.

If AI programs owned by those with conflicts of interests are trading this meme coin, it is highly likely that the coin cannot but FAIL, because the system programs hold all the cards, as it were, both in numbers of coins and ability to intervene to deflate the price.  For when you buy any of these coins, at any price, a system program which bought them at 1/100th of a penny can intervene and sell a quantity to reduce the price of the coin below what you paid for it. Thus effectively pumping your investment out into the pockets of whoever is running these “system programs”.

I would urge all investors into meme coins to ask the platform trading them for a full disclosure, on all topics, espcially on what “system programs” are involved, what their actions are, and what are the limitations placed upon them to guarantee the integrity of the market and the equitable (fair) conditions for human investors. Short of that, the platform is even less secure than a roulette table in a casino owned by the Mafia.

In my opinion, an ethical platform will not allow entities who have the fiduciary responsibility to run the market or offer the coin for sale from owning any coins and engaging in any sales or purchases, and only charge a fee for purchase and sale. Moreover, ALL transactions, enacted by “system programs” should be clearly marked with special colors or flashing font, so that humans reading the ledgers, can see who are humans and who are not, and what is the purpose of the systems interventions (sale to public, purchase from public, fees, commissions, service costs etc..)

The $Jproof offering, however, seems to have given 11% of the entire offering into the hands of those with conflicts of interest.

See my disclosures on my first report, which I intent to apply to all my reports on $Jproof.

UPDATE: Just two months ago, Solana, the company which launched this meme coin, was involved in a ethical scandal, called a “rug pull” as is explained in this Wikipedia article below, from which I extract this “money quote”:

Several economic experts pointed out that those affected had advanced knowledge of digital currencies since, to access said cryptocurrency, it was necessary to have a wallet in Solana, a blockchain known for its low security and reduced operating costs. In addition, the purchase had to be made with the SOL cryptocurrency, which limited participation to people with prior knowledge of the ecosystem.^[30]

A “rug pull” is when the human investors who launched the meme coin sell our their holdings reducing the value of the coin to much less and thus ruining the investments of all other holders. This is NOT what I have feared about $Jproof, I should make clear. What is happening with $Jproof coin regards the agencies of these “system programs”.

From the mountain top of all this information, I remain very concerned that the platforms used to launch and market memecoins are in fact designed to be able to milk the reputation of real persons, such as Javier Milei and Stew Peter’s, so as to rob the savings of their fans, in a way that has a legal protection for the perpetrators. There may be very legal and complete disclosures, but when the human buyer has to compete with other actors who have 1000s of times more coin than themselves, and who acquired those coins for less capital than all human actors in the market, I cannot see how gross robbery does not result in the end, by necessity, even if some lawyer could argue that the “investors should have known the risks”. Fans who trust Stew Peters deserve better.